he following accounts appeared in recent financial statements of Delta Air Lines
ID: 2329336 • Letter: H
Question
he following accounts appeared in recent financial statements of Delta Air Lines. Identify each account as either a balance sheet account or an come statement account. For each balance sheet account, identify It as an asset, a liability, or stockholders' equity. For each income statement ccount, identify it as a revenue or an expense. tem Accounts Payable Advanced Payments for Equipment Air Traffic Liability Aircraft Fuel (Expense) Aircraft Maintenance (Expense) Aircraft Rent (Expense) Cargo Revenue Cash Contract Carrier Arrangements (Expense) Flight Equipment Frequent Flyer (Obligations) Fuel Inventory Financial Statement Type of Account Landing Fees (Expense) Parts and Supplies Inventories Passenger Commissions (Expense)Explanation / Answer
Item Financial statement Type of account Comment Accounts Payable Balance Sheet liability Accounts payble represnts the amount payable by the company to outsiders for purchase. It’s a current liabilty under balance sheet Advanced payment for equipments Balance Sheet Assets Advance payments are the assets because equipments has not been received for it. So , supplier is under an obligation. Air traffic liability Balance Sheet liability These are the airline liabilities to the passenger or to the outsiders for the services to be provided or to be refunded. Hence these are liability Aircraft Fuel (expense) Income Statement Account Expense These are direct expenses for the airlines, which are necessary to run the business Aircraft Maintenance (expense) Income Statement Account Expense These are direct expenses for the airlines, which are necessary to run the business Aircraft rent (expense) Income Statement Account Expense These are direct expenses for the airlines, which are necessary to run the business Cargo revenue Income Statement Account Revenue cargo revenue is the source of earning of the airlines by transporting goods Cash Balance Sheet Assets cash is a part of current asset in the balance sheet Contract Carrier Arrangements (Expense) Income Statement Account Expense These contract allows the airlines to run their business. As mention in the question it is the expense for the same. Hence marked as expense. Flight equipment Balance Sheet Assets Equipment is a fixed asset of the enterprise Frequent Flyer (Obligations) Balance Sheet liability These are obligations to the frequent customers of the organisation. It is liability because it is payble to the customers Fuel Inventory Balance Sheet Assets Inventory is a part of current assets Landing Fees (expense) Income Statement Account Expense these are the expenses for landing (parking) of airplanes Parts and supplies Inventories Balance Sheet Assets Inventory is a part of current assets Passenger commissions (Expense) Income Statement Account Expense Commissions paid to the agents for bringing passengers are the expense for the airlines.
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