Final answer:
If the value of net fixed assets equals accumulated depreciation, the fixed assets are fully depreciated. This accounting concept reflects in the T-account, where assets, liabilities, and net worth are documented to analyze a firm's financial position.
Thus the corret opction is:a
Step-by-step explanation:
When the value of a firm's net fixed assets equals the value of the accumulated depreciation, this generally implies that the fixed assets are fully depreciated.
Fixed assets are recorded at their cost, and over time, the cost is systematically reduced via depreciation, reflecting the asset's decreasing value due to wear and tear or obsolescence.
Accumulated depreciation is the total amount of depreciation expensed against an asset, and when it equals the original cost, this would mean no book value remains.
Hence, fully depreciated is the answer, which corresponds to option (a).
Accounting Context
Within accounting, T-accounts are used to represent the financial positions of a business.
The left side shows assets, while the right side displays liabilities and the firm's net worth or equity, with net worth being total assets minus total liabilities. In a T-account, total assets always equal liabilities plus net worth.
This helps provide a clear understanding of a business's financial health, including the state of its fixed assets.
The complete question is:If the value of a firm's net fixed assets equals the value of the accumulated depreciation, from an accounting context the fixed assets are:
(a) Fully depreciated
(b) Over depreciated
(c) Under depreciated
(d) None of the above