Question

Depreciation is charged to reduce the value of asset to its market value.

• A. True
• B. False

Answer 1

The correct option is B False

Depreciation is charged for the following reason :

1. To ascertain true financial performance.
2. To present true and fair view of the financial position.
3. To ascertain the true cost of production.
4. To comply with legal requirement.
5. To accumulate funds for replacement of asset.