Identify the group that represents grouping of accounts based on clas…

The correct answer is Option (3) → Asset, Liabilities, Capital, Revenue and Expenses

Accounts are grouped through the accounting equation. The basic form, Assets = Liabilities + Capital, is extended for the income statement to Assets = Liabilities + Capital + (Revenues − Expenses). So the classification of data gives five groups: assets, liabilities, capital, revenue and expenses.

Option (1) Asset, Liabilities and Capital — Incorrect. It leaves out revenue and expenses, which change capital during the year.

Option (2) Asset, Owners Equity, Revenue and Expenses — Incorrect. It leaves out liabilities, the claims of outsiders.

Option (4) Asset, Liabilities, Revenue and Expenses — Incorrect. It leaves out capital, the owners’ claim.