Q: Where does amortization expense go?
A: An amortization expense is an operating expense on the income statement. It represents the decrease in an Intangible Asset such as distribution rights, which a company pays for that last over a number of years. Intangible Assets lose value year by year. That loss in value is expressed as an amortization expense on the income statement.
Q: Did you say that Accrued liabilities was an expense?
A: Accrued liabilities are a liability. They represent expenses that the company has not yet paid. For example, a consultant sends an invoice to a company for services performed. If the company does not pay the invoice immediately in cash, the company reports it as an accrued liability that is due to be paid in the near future.
Q: I am confused. You said that Fixed assets were on the income statement...
A: Fixed assets are reported as an asset on the balance sheet. They capture hard assets such as equipment and real estate and soft assets such as loan fees or territory distribution rights. Frequently fixed assets apply to hard assets and such things as distribution rights are classified as Intangible Assets.
Q: What is the income tax expense again?
A: The income tax expense is the amount of income tax a company owes on the profit it generates. The amount of the income tax expenses depends on the applicable income tax rate and the amount of the company's profit.
Q: Office supplies are an expense on the income statement, but the physical office building would be a long-term asset, correct?
A: Absolutely correct. Office supplies are an expense on the income statement while a physical office building would be reported as a long-term, or fixed, asset.
Q: Can you show us the slide with the account titles and amounts please? (Slide 58, 59, 60?)
A: All the slides except the poll solutions are included in the PowerPoint slides available through a link in your confirmation email. You will receive a link to the written solutions to the Poll Questions within 24 hours of the session’s end.
Course overview: Financial Statement Structure and Composition