Question

The reduction in the value of the fixed assets which can arise due to time factor is:

• A. Discount
• B. Depreciation
• C. Reduction
• D. None of these

Answer 1

The correct option is B Depreciation

Fixed assets are those assets that have a long useful life. These assets get deteriorated due to their usage along with passes of time and looses their value too. This reduction in the value of assets due to usage and time is called depreciation.

Depreciation has to be charged to the profit & loss account as an expense and the value of the assets to be reduced while showing in the balance sheet.