Depreciation as the term is used in accounting means _____________.

Transfer/sale of fixed asset

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Decline in the market value of an asset

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Allocation of the cost of fixed asset over its useful life

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Making a provision for losses

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is C Allocation of the cost of fixed asset over its useful life
Depreciation is provided on fixed assets on account of wear and tear of the asset by using them. Depreciation is provided on assets based on the useful life of the assets.
Various methods are used to provide the depreciation which includes straight line method and written down value method.
The main objective of providing depreciation is to allocate the cost of asset to profit & loss account during the estimated life of the assets.

Suggest Corrections

Similar questions

___is a method of depreciation, in which the cost of the asset is spread uniformly over the life years by writing off a fixed amount every year, where as in ___ method of depreciation, a fixed rate of depreciation is charged on the book value of the asset over its useful life.

Q. Which of the following statements is/are false?
(I) The term 'depreciation', 'depletion' and 'amortization' convey the same meaning.
(II) Provision For Depreciation A/c debited when Provision For Depreciation A/c is created.
(III) The main purpose of charging the Profit & Loss A/c with the amount of depreciation is to spread the cost of an asset over its useful life for the purpose of income determination.
The correct option is -

Q. Which of the following statements is/are false?
I. The term 'depreciation', 'depletion' and 'amortization' have same meaning
II. Provision for depreciation A/c is debited when provision for depreciation is created.
III. The main purpose of charging the Profit and Loss A/c with the amount of depreciated is to spread the cost of an asset over its useful life.

Q. Allocating the cost of a fixed asset over its useful life is called __________.

Q. Which of the following statements is/are false?
I. The term 'depreciation', 'depletion' and 'amortization' convey the same meaning.
II. Provision for depreciation a/c is debited when provision for depreciation a/c is created.
III. The main purpose of charging the profits and loss a/c with the amount of depreciation is to spread the cost of an asset over useful life for the purpose of income determination.

Join BYJU'S Learning Program