Question

Profit can not be calculated properly unless depreciation is provided.

• A. True
• B. False

Answer 1

The correct option is A True

Depreciation should be provided before ascertaining profit or loss for a certain period. If it is not provided, profit cannot be calculated properly. One of the objectives of depreciation is calculation of correct profit.

In order to ascertain correct profit or loss for a certain period, it is essential that adequate depreciation should be provided and charged against income. If profit is calculated without charging depreciation, it will be cash profit. But correct net profit or net loss can be ascertained only after providing for a depreciation of assets.