Analysing Comparative Statement of Profit and Loss
State with re...
Question
State with reasons whether following statements are True or False: Providing depreciation in the accounts reduces the amount of profit available for dividend.
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Solution
This statement is false.
Yes due to providing depreciation profit will be reduce but the purpose is not to reduce it for dividend payment we will reduce it for making provision for the future as we have to purchase new machinery when old one damaged.