On which of the four major financial statements would you find 'Net Plant and Equipment' reported?

• A. Balance Sheet
• B. Income Statement
• C. Statement of Stockholders' Equity
• D. Statement of Cash Flows

Answer: (A)

Verified step by step guidance

1. Understand the purpose of each of the four major financial statements: The Balance Sheet reports a company's financial position at a specific point in time, including assets, liabilities, and equity. The Income Statement shows the company's performance over a period, including revenues and expenses. The Statement of Stockholders' Equity details changes in equity accounts. The Statement of Cash Flows explains cash inflows and outflows during a period.
2. Recognize that 'Net Plant and Equipment' refers to a long-term asset, which is typically reported under the 'Property, Plant, and Equipment' section of the Balance Sheet. This section includes tangible fixed assets used in operations, net of accumulated depreciation.
3. Recall that the Balance Sheet is structured into three main sections: Assets, Liabilities, and Stockholders' Equity. 'Net Plant and Equipment' falls under the Assets section, specifically as part of non-current or long-term assets.
4. Eliminate the other financial statements: The Income Statement does not report asset balances; it focuses on revenues and expenses. The Statement of Stockholders' Equity tracks changes in equity accounts, not specific asset details. The Statement of Cash Flows shows cash movements but does not list asset balances like 'Net Plant and Equipment.'
5. Conclude that 'Net Plant and Equipment' is reported on the Balance Sheet, as it represents a tangible asset that contributes to the company's financial position at a specific point in time.