Question

For each of the following accounts used by a retail business, determine its classification: asset, contra-asset, liability, revenue, contra-revenue, or expense.

a. Sales Discounts
b. Freight-Out
c. Accumulated Depreciation

Answer 1

Classification for each of the following account is given below.

a. Sales Discounts - Sales discount is classified as contra revenue account. These type of accounts has debit balance.

b. Freight-Out - It is an expense account. These type of accounts has debit balance.

c. Accumulated Depreciation - This can be classified as contra depreciation account. This account has credit balance.