Multiple Choice
Which of the following financial statements are normally included in public reports?
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1. Introduction to Accounting
The Financial Statements
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Accumulated amortization is reported on which of the following financial statements?
A
Balance Sheet
B
Statement of Cash Flows
C
Income Statement
D
Statement of Retained Earnings
Verified step by step guidance1
Understand the concept of accumulated amortization: Accumulated amortization represents the total amount of amortization expense that has been recorded for intangible assets over time. It is similar to accumulated depreciation but applies to intangible assets like patents, trademarks, or copyrights.
Identify the financial statement where accumulated amortization is reported: Accumulated amortization is a contra-asset account, meaning it reduces the value of the associated intangible asset on the financial statements.
Recall the structure of the Balance Sheet: The Balance Sheet reports assets, liabilities, and equity. Intangible assets, along with their accumulated amortization, are listed under the assets section.
Eliminate other options: Accumulated amortization is not reported on the Statement of Cash Flows, Income Statement, or Statement of Retained Earnings because these statements focus on cash movements, revenues/expenses, and changes in equity, respectively.
Conclude that accumulated amortization is reported on the Balance Sheet, as it adjusts the value of intangible assets in the assets section.
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