Referring to the Chart of Accounts report printed in Step 10 of the Practical Exam, which Account Type did you select for the Internet Expense accounts?

Question

BlackTom AI · Accepted Answer

To analyze the question, we start by identifying what the Chart of Accounts is used for and how account types are typically categorized in financial statements.
Option 1: Balance Sheet. This is not the correct placement for an expense like Internet Expense. Balance Sheet accounts are assets, liabilities, and equity, whereas Internet Expense is an ongoing cost recorded on the income statement, not on the balance sheet.
Option 2: Income Statement. This is the correct category for an expense account such as Internet Expense. Expense accounts are used to track costs incurred during a period, and they impact the income statement by reducing net income. Assigning Internet Expense to the Income Statement aligns with standard accounting practice, where operating costs appear on the P&L rather than on the balance sheet.
Option 3: Retained Earnings. Retained Earnings is an equity account representing accumulated profits retained in the business. It does not categorize operating expenses; expenses do not get posted to retained earnings directly, so this option is incorrect.
Option 4: Credit. 'Credit' is not a valid account type; it describes a normal balance direction for many accounts but does not itself specify the proper category in the Chart of Accounts. Using 'Credit' as an account type would be inappropriate for an expense account and can lead to misclassification.
In summary, Internet Expense belongs on the income statement as an operating expense, rather than on the balance sheet or as an equity item, and it is not correctly described by the label 'Credit.'

SG30018E1 - Sage 300 2018 General Ledger Final Exam

Referring to the Chart of Accounts report printed in Step 10 of the Practical Exam, which Account Type did you select for the Internet Expense accounts?

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