Construct a balance sheet using the following information. Gross fixed assets $75,000 Cash $10,000 Other assets $15,000 Accounts payable $40,000 Retained earnings $15,000 Accumulated depreciation $20,000 Accounts receivable $50,000 Long-term note $5,000 Mortgage $20,000 Common Stock $100,000 Inventory $70,000 Short-term notes $20,000
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Construct a
Gross fixed assets $75,000
Cash $10,000
Other assets $15,000
Accounts payable $40,000
Accumulated depreciation $20,000
Long-term note $5,000
Mortgage $20,000
Common Stock $100,000
Inventory $70,000
Short-term notes $20,000
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