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

8. Long Lived Assets

Depreciation: Straight Line

Financial Accounting

8. Long Lived Assets

Depreciation: Straight Line

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Multiple Choice

Depreciation is a systematic write-off of the cost of a tangible asset that is listed on the:

Statement of Retained Earnings

Statement of Cash Flows

Income Statement

Balance Sheet

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Verified step by step guidance

Understand the concept of depreciation: Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. It reflects the wear and tear or obsolescence of the asset over time.

Identify where depreciation is recorded: Depreciation is not directly listed on the Statement of Retained Earnings, Statement of Cash Flows, or Income Statement. Instead, it is recorded on the Balance Sheet as part of accumulated depreciation, which reduces the value of the asset.

Learn the relationship between depreciation and the Balance Sheet: On the Balance Sheet, tangible assets are listed under 'Property, Plant, and Equipment' (PP&E). Accumulated depreciation is subtracted from the original cost of the asset to show its net book value.

Understand the impact of depreciation on other financial statements: While depreciation itself is recorded on the Balance Sheet, the depreciation expense is reported on the Income Statement, reducing net income. Additionally, depreciation indirectly affects the Statement of Cash Flows by being added back to net income in the operating activities section.

Review the correct answer: Based on the explanation above, depreciation is systematically written off and reflected on the Balance Sheet under accumulated depreciation, which reduces the value of tangible assets.