1: Classification Exercise: Based upon the items listed below, determine if they would be included on the balance sheet or income statement. If it is on the balance sheet, determine if it is an asset, liability or equity. Account Title Classification Accounts Receivable Accounts Payable Accrued Liabilities Accumulated Depreciation Cash Common Stock (Owner's Investment) Cost of goods sold Depreciation Expense Equipment Inventory Investments Land Net income Operating Income Prepaid Insurance Retained earnings Revenue Salaries Payable Salary Expense Problem 2: Preparation of an income statement from a list of accounts: Based upon the items below, create an income statement in proper form. All items may not be used. Account Name Balance in US $ Account Balance Balance in US $ General and Administrative Expense 74,000 Revenue 1,200,000 Accumulated Deprecation 43,000 Prepaid Rent 22,000 Retained Earnings 195,000 Research and Development Expense 116,000 Cost of goods sold 690,000 Cash 45,000 Accounts Payable 97,000 Depreciation Expense 21,000 Rent Expense 178,000 Interest Expense 19,000