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

2. Transaction Analysis

Classified Balance Sheet Components

Financial Accounting

2. Transaction Analysis

Classified Balance Sheet Components

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Multiple Choice

On a classified balance sheet, where is the account 'Accumulated Depreciation on Equipment' reported?

As a current liability

As part of stockholders' equity

As an intangible asset

As a contra-asset under property, plant, and equipment

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Verified step by step guidance

Understand the concept of 'Accumulated Depreciation': It represents the total depreciation expense recorded for an asset over its useful life. It is not an asset itself but reduces the value of the related asset on the balance sheet.

Learn the classification of 'Accumulated Depreciation': It is categorized as a contra-asset account, meaning it offsets or reduces the value of an associated asset account, such as 'Equipment'.

Identify the section of the balance sheet: 'Accumulated Depreciation' is reported under the 'Property, Plant, and Equipment' section, which is part of non-current assets on a classified balance sheet.

Understand the presentation: On the balance sheet, 'Accumulated Depreciation' is subtracted from the gross value of the related asset (e.g., Equipment) to show the net book value of the asset.

Review the purpose: The inclusion of 'Accumulated Depreciation' as a contra-asset provides a clearer picture of the asset's current value and helps stakeholders assess the company's financial position accurately.