Question

If depreciation is not provided it will result into______.

• A. Overstatement of asset
• B. Undertatement of asset
• C. No effect on asset
• D. True position of asset

Answer 1

Answer: (A)

Overstatement of asset

Depreciation is charge due to wear and tear of the asset due to usage. The asset losses its value due to normal wear and tear and obsolescence.

Hence depreciation is charged every year to reduce the value of asset.

If depreciation is not provided it will result in to overstatement of asset.