AC114 Unit 2 Account Classification Exercise Example

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Twenty-three accounts in the chart of a composite window-cleaning corporation are sorted by type, statement and normal balance in this AC114 Unit 2 account classification exercise. Purdue Global AC 114, Accounting I, asks BS in Accounting students to settle classification before recording any transaction, because every later unit inherits it. Brightpane Window Care's balance sheet accounts run from Cash to Retained Earnings, including two contra asset accounts for accumulated depreciation, and its income statement accounts cover service revenue and six expenses. Each line gives the account number and title, its type, the statement it lands on and the side that increases it. A closing section explains three accounts students most often misplace: Unearned Service Revenue as a liability, Dividends as a reduction of equity rather than an expense, and accumulated depreciation's credit balance.

CourseAC114 Accounting I
UnitUnit 2
Paper typeAccount classification exercise
LengthAbout 630 words, 5 pages double-spaced
FormatAPA 7 student paper
SchoolPurdue University Global
ProgramBS in Accounting
UpdatedOctober 2026

Free sample paper for AC114 Unit 2

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Twenty-Three Accounts Sorted Three Ways: A Unit 2 Account Classification Exercise for a Window-Cleaning Corporation

[Student Name]

Purdue University Global

AC114: Accounting I

Unit 2 Account Classification Exercise

[Instructor Name]

[Date]

Brightpane Window Care, Inc. and its chart of accounts are composite; the textbook, framework and history of double entry cited are real.

What this part is doingNaming the three sorts and promising the commonly misplaced accounts in the lead shows the exercise goes beyond a list.
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The Rules Used

Debits raise the accounts on the left of the equation together with dividends and every expense, while credits raise what the company owes, what shareholders have put in or kept, and what it has earned. That pairing of left and right sides goes back to the double-entry method described in Renaissance Italy (Sangster, 2016). Contra accounts take the opposite side of the account they reduce. Assets, liabilities and equity accounts appear on the balance sheet; revenue and expenses appear on the income statement; dividends appear on the statement of retained earnings (Franklin et al., 2019). Each line below gives the account number and title, its type, its statement and its normal balance.

Balance Sheet Accounts

1. 101 Cash: asset; balance sheet; debit.

2. 112 Accounts Receivable: asset; balance sheet; debit.

3. 126 Cleaning Supplies: asset; balance sheet; debit.

4. 130 Prepaid Insurance: asset; balance sheet; debit.

5. 157 Equipment: asset; balance sheet; debit.

6. 158 Accumulated Depreciation, Equipment: contra asset; balance sheet; credit.

7. 167 Truck: asset; balance sheet; debit.

8. 168 Accumulated Depreciation, Truck: contra asset; balance sheet; credit.

9. 201 Accounts Payable: liability; balance sheet; credit.

10. 209 Unearned Service Revenue: liability; balance sheet; credit.

11. 212 Salaries Payable: liability; balance sheet; credit.

12. 230 Interest Payable: liability; balance sheet; credit.

13. 250 Notes Payable: liability; balance sheet; credit.

14. 311 Common Stock: equity; balance sheet; credit.

15. 320 Retained Earnings: equity; balance sheet and statement of retained earnings; credit.

Income Statement Accounts and Dividends

16. 332 Dividends: reduction of equity; statement of retained earnings; debit.

17. 400 Service Revenue: revenue; income statement; credit.

18. 726 Salaries Expense: expense; income statement; debit.

19. 631 Supplies Expense: expense; income statement; debit.

20. 722 Insurance Expense: expense; income statement; debit.

21. 711 Depreciation Expense: expense; income statement; debit.

22. 740 Fuel Expense: expense; income statement; debit.

23. 905 Interest Expense: expense; income statement; debit.

Three Accounts Worth a Second Look

Unearned Service Revenue is the account most often misplaced, because its name contains the word revenue. It is a liability. When a property manager pays in advance for six months of cleaning, Brightpane owes the work, and until the work is done the cash is an obligation rather than an earning.

An account's name can mislead; its classification depends on what the business owns, owes or has earned at the moment, which is why Unearned Service Revenue belongs with the liabilities.

What this part is doingThe highlighted sentence explains the principle behind the trickiest classification, which graders look for beyond the list itself.
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Dividends are the second. They reduce equity and carry a debit balance, but they are not an expense, because paying shareholders is not a cost of cleaning windows. They therefore appear on the statement of retained earnings, never on the income statement.

The third is each Accumulated Depreciation account. These carry credit balances while sitting among the assets, because they record how much of the equipment's and truck's cost has been used up. Keeping them separate preserves the original cost on the balance sheet while showing the net amount.

Why the Classification Matters Now

Every journal entry in the next unit depends on knowing which side increases each account. A classification error made here, such as treating unearned revenue as revenue, would overstate June's income and understate what the company owes, and it would carry through the ledger, the trial balance and the statements. Financial information is useful only when it faithfully represents the company's position (Financial Accounting Standards Board, 2018), and faithful representation begins with putting each account in the right place.

What this part is doingEnding with the downstream effect of a classification error shows why the unit carries points in a course built step by step.
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References

Financial Accounting Standards Board. (2018). Conceptual framework for financial reporting: Chapter 1, The objective of general purpose financial reporting, and Chapter 3, Qualitative characteristics of useful financial information (Statement of Financial Accounting Concepts No. 8, as amended). https://www.fasb.org

Franklin, M., Graybeal, P., & Cooper, D. (2019). Principles of accounting, volume 1: Financial accounting. OpenStax. https://openstax.org/details/books/principles-financial-accounting

Sangster, A. (2016). The genesis of double entry bookkeeping. The Accounting Review, 91(1), 299-315. https://doi.org/10.2308/accr-51115

What the AC114 Unit 2 assignment asks for

In the second AC114 unit, students classify every account in a supplied chart before recording transactions. For each account, give its type, such as asset, liability, equity, revenue or expense, the financial statement where it appears and its normal balance. Note contra accounts and explain why their balance is on the opposite side. For a corporation, distinguish common stock, retained earnings and dividends. Some prompts also ask whether each account is temporary or permanent. Organize the list so a reader can scan it, often by statement. A short explanation of any tricky accounts adds value and is sometimes required. Most exercises fit on one or two pages. Cite the textbook for the rules you apply, using APA 7, and keep your account titles exactly as the chart gives them.

How the AC 114 Unit 2 example is put together

The sample opens with the rules: which accounts debits raise, which credits raise, how contra accounts behave and which statement each type belongs to, with a nod to the origins of double entry. Fifteen balance sheet accounts follow, each with number, type, statement and normal balance, including accumulated depreciation for equipment and for the truck. Eight more cover dividends, service revenue and six expenses. A section then explains three accounts in depth. The highlighted sentence argues that an account's name can mislead, using Unearned Service Revenue as the case. Dividends are explained as a distribution rather than a cost. The two accumulated depreciation accounts are explained as contra assets. A final section shows how one misclassification would carry through later units.

Reading the AC114 Unit 2 grading rubric

Classification exercises are graded mainly on accuracy across every account in the chart. Type, statement and normal balance each count, so one wrong column on several lines adds up. Contra accounts and unearned revenue are frequent scoring points because they are commonly misclassified. Corporations must show dividends as a reduction of retained earnings, not an expense. A clear layout lets a grader check quickly. Explanations of tricky accounts earn credit where the prompt asks for them and add strength where it does not. Consistent titles that match the chart matter in AC114, since later units refer back to them. Citations to the textbook and APA 7 formatting complete the marks.

AC114 Unit 2 help: mistakes that cost points

The most common classification error is placing Unearned Service Revenue with revenues because of its name. Dividends are often listed as an expense. Accumulated depreciation is given a debit balance or treated as a liability. Some students forget that retained earnings appears on two statements. Account titles drift from the chart, which causes confusion in later units. Explanations are skipped, so the exercise looks like a copied list. If your chart is long and some accounts do not fit neatly, our team can classify it with explanations for the ones that cause trouble.

Get an AC114 Unit 2 example written to your instructions

Send the chart of accounts your AC114 section uses for Unit 2 with the instructions and rubric, and the classification table is built on those exact titles. It arrives inside 24-48h. No fee applies to the first custom sample, and every tricky row carries the reasoning your grader will be looking for. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.

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AC114 Unit 2 questions, answered

Why does accumulated depreciation have a credit balance if it is an asset account?

Because it is a contra asset: it sits under the asset it relates to and reduces it. Equipment keeps its original cost as a debit, and the portion used up so far accumulates as a credit beside it, so a reader can see both figures. Their difference is the book value that later appears on the balance sheet.

Does classification really matter this early?

More than its position suggests. AC114 builds each unit on the last, so an account misclassified in Unit 2 tends to be posted to the wrong side in Unit 4, extended to the wrong column in Unit 6 and closed incorrectly in Unit 8. Graders who teach the sequence know that, which is why this table is marked with care.

Where can I find a free AC114 Unit 2 sample paper?

You can read a complete AC114 Unit 2 account classification exercise here, sorting twenty-three accounts for a window-cleaning corporation by type, statement and normal balance, with three tricky accounts explained.

Why is unearned revenue a liability in the AC114 Unit 2 sample?

The company has received cash for cleaning it has not yet done, so it owes the customer the work. Until each cleaning is performed, the amount is an obligation, not an earning.

Are dividends an expense in the AC114 Unit 2 sample?

No. Dividends distribute profit to shareholders and are not a cost of cleaning windows. They carry a debit balance, reduce retained earnings and appear only on the statement of retained earnings.