What financial concept is described as the cumulative depreciation of fixed assets recorded on a balance sheet?

The cumulative depreciation of fixed assets recorded on a balance sheet is known as accumulated depreciation. This concept represents the total amount of depreciation expense that has been allocated for an asset since it was acquired, reflecting the decline in value of that asset over time due to factors like wear and tear, obsolescence, or usage.

Accumulated depreciation is important for understanding the book value of fixed assets, as it provides insight into how much of the asset's original cost has been expensed. This accumulated figure is subtracted from the asset’s original cost to determine its current value, which is essential for financial reporting and assessing the financial health of a business.