Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Adjusting Entries: Depreciation

Financial Accounting

3. Accrual Accounting Concepts

Adjusting Entries: Depreciation

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Multiple Choice

Which financial statement reports the amount of accumulated depreciation?

Balance Sheet

Statement of Cash Flows

Statement of Retained Earnings

Income Statement

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Verified step by step guidance

Understand the concept of accumulated depreciation: Accumulated depreciation is the total amount of depreciation expense that has been recorded for an asset over its useful life. It is a contra-asset account, meaning it reduces the value of the related asset on the financial statements.

Identify the financial statement where accumulated depreciation is reported: Accumulated depreciation is reported on the Balance Sheet because it is directly tied to the value of long-term assets, such as property, plant, and equipment.

Learn the placement of accumulated depreciation on the Balance Sheet: On the Balance Sheet, accumulated depreciation is listed under the assets section, typically as a deduction from the gross value of the related asset. For example, if the gross value of equipment is $100,000 and accumulated depreciation is $30,000, the net book value of the equipment would be $70,000.

Understand why accumulated depreciation is not reported on other financial statements: The Statement of Cash Flows focuses on cash transactions, the Statement of Retained Earnings tracks changes in retained earnings, and the Income Statement reports revenues and expenses. Accumulated depreciation does not directly impact these statements because it is a non-cash account and does not affect retained earnings or net income directly.

Review the purpose of the Balance Sheet: The Balance Sheet provides a snapshot of a company's financial position at a specific point in time, including assets, liabilities, and equity. Accumulated depreciation is included to show the net value of long-term assets, which is essential for understanding the company's financial health.