Question

The main objective of providing depreciation is __________________.

• A. To calculate true profit
• B. To calculate financial position
• C. To reduce tax burden
• D. To reduce profit

Answer 1

Answer: (A)

To calculate true profit

Objectives or Need for Providing Depreciation:

(a) To ascertain true profits:

(b) To show the assets at their proper values:

(c) To create funds for replacement of assets:

(d) To keep the capital in tact

(e) Statutory Need ,Provision of depreciation is a statutory need.

(f) To present true financial position.