GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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To reduce tax burden
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To calculate true profit
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To provide funds for replacement of fixed assets
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To show the true financial position in the balance sheet
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Detailed explanation-1: -The main objective of providing depreciation is to calculate the true profit and provide funds for replacement of fixed assets.
Detailed explanation-2: -The main objective of providing depreciation is to Create funds for replacement of fixed assets.
Detailed explanation-3: -Depreciation allows for companies to recover the cost of an asset when it was purchased. The process allows for companies to cover the total cost of an asset over it’s lifespan instead of immediately recovering the purchase cost. This allows companies to replace future assets using the appropriate amount of revenue.
Detailed explanation-4: -The objectives of providing Depreciation are: knowledge of true profits, true financial position, replacement of assets, and correct cost of production.
Detailed explanation-5: -The correct answer is Book value. The value of a fixed asset after deducting depreciation from the historical cost is called Book value.