Which of the following is not a characteristic of accumulated depreciation account?
A) Accumulated depreciation represents cash reserved for asset replacement.
B) Accumulated depreciation account is a contra-asset account.
C) Accumulated depreciation may be disclosed in the notes to the financial statements.
D) Accumulated depreciation is reported on the balance sheet as a deduction from the cost of the asset.

Question

Quizplus · Accepted Answer

Accumulated depreciation does not represent cash reserved for asset replacement. It represents the total depreciation expense that has been charged against the asset over its life. The purpose of accumulated depreciation is to reduce the book value of the asset on the balance sheet.

Which of the Following Is Not a Characteristic of Accumulated