Chapter 1 — Foundations & The Accounting Equation

Balance Sheet Filter

Learning Outcome Covered: 1.5b

Clean the Balance Sheet

✅ Assets

✅ Liabilities

❌ Revenue

🎯 Objective

Identify and remove accounts that do NOT belong on the Balance Sheet. Only permanent accounts (Assets, Liabilities, Equity) should remain!

🎮 How to Play

See a list of accounts
Tap accounts that do NOT belong on the Balance Sheet
Remove all contaminants (Revenues, Expenses, Dividends, Drawings)
Submit when only Balance Sheet accounts remain

⭐ How stars work: more stars = a better result. 3 stars = no mistakes at all.

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📚 Learning: What Goes on the Balance Sheet?

📘 What You Will Learn

The Balance Sheet shows what a company owns (Assets), owes (Liabilities), and the owner's share (Equity) at one point in time. Only permanent accounts appear here!

✅ What Belongs (Permanent Accounts)

Assets - Cash, Equipment, Land, Building, Accounts Receivable, Supplies
Liabilities - Accounts Payable, Notes Payable
Equity - Owner's Capital, Common Stock, Retained Earnings

⚠️ What Does NOT Belong (Temporary Accounts)

Revenues - Service Revenue, Sales Revenue (these go on the Income Statement)
Expenses - Rent Expense, Salaries Expense, Utilities Expense, etc.
Dividends - Closed to Retained Earnings at year end
Owner's Drawings - Closed to Owner's Capital at year end

Why? Temporary accounts are closed at year end. Their balances move into Retained Earnings (or Owner's Capital). After closing, they have zero balances.

💡 The Balance Sheet Equation

Assets = Liabilities + Equity

Only permanent accounts that report balances at a point in time belong on the Balance Sheet.

✅ Belongs on Balance Sheet	❌ Does NOT Belong
Cash (Asset)	Service Revenue
Equipment (Asset)	Rent Expense
Accounts Payable (Liability)	Salaries Expense
Retained Earnings (Equity)	Dividends

🧠 Remember

Balance Sheet = Permanent accounts only = Assets + Liabilities + Equity

🔤 Quick Classification: ALOE & RED

ALOE → Assets, Liabilities, Owner's equity (Equity) → these belong on the Balance Sheet.

RED → Revenues, Expenses, Dividends/Drawings → Revenues and Expenses go on the Income Statement; Dividends/Drawings reduce equity.

If a card is RED, it doesn't belong on the Balance Sheet — remove it.

Round

1/10

Score

0

🔥 0

Remove accounts that do NOT belong on the Balance Sheet.

Balance Sheet Accounts

Contaminants: 0

🏆 Game Complete!

0%

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Keep practicing!

Correct Rounds: 0