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Cash Flow from Investing Activities

Assets are de...

Question

Assets are depreciated on the basis of expected life rather than on the basis of market value according to _____________.

A

going concern concept

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B

cost concept

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C

entity concept

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D

matching concept

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Solution

The correct option is A going concern concept
Going Concern Concept is an accounting principle which states that the operations of the business will not stop in near future and the business will continue to operate,
Therefore, Fixed Assets are not written off after a year and they are depreciated on the basis of expected life rather than on the basis of market value due to going concern concept only.

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