Using the List of Accounts Below, Construct a Chart of Accounts

question 142

Essay

Using the list of accounts below, construct a chart of accounts for a merchandising business that rents out a portion of its building, and assign account numbers and arrange the accounts in balance sheet and income statement order
("1" for assets, and so on). Each account number should have three digits. Contra accounts should be designated with a decimal of the account
(100.1 for contra of account 100). Assets and liabilities should be in order of liquidity; expenses should be in alphabetical order.? $$\begin{array} { | l | l | l | } \hline\text { Accounts Payable } & \text { Interest Expense } & \text { Salaries Payable } \\\hline \text { Accounts Receivable } & \text { Land } & \text { Sales } \\\hline \text { Accumulated Depr.-Equip. } & \text { Merchandise Inventory } & \text { Supplies Expense } \\\hline \text { Advertising Expense } & \text { Notes Payable } & \text { Unearned Revenue } \\\hline & & \\\hline \text { Cash } & \text { Office Supplies } & \text { Utilities Expense } \\\hline \text { Cost of Merchandise Sold } & \text { Owner, Capital } & \\\hline \begin{array} { l } \text { Depreciation Expense- } \\\text { Equip. }\end{array} & \text { Owner, Drawing } & \\\hline \text { Equipment } & \text { Rent Revenue } & \\\hline & \text { Salaries Expense } & \\\hline\end{array}$$

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Definitions:

Variable Cost Data

Information related to costs that vary directly with the level of output or production volume.

Activity Index

A measure used to track the level of activity or engagement in a particular context, often used in business or economics to gauge performance or interest.

Budget Difference

The variance between the budgeted amount and the actual amount spent or received in a given period.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels.