Question

Under Annuity method Asset A/c is debited by ________________.

• A. Interest A/c
• B. Depreciation fund A/c
• C. Sinking fund A/c
• D. None of these

Answer 1

The correct option is A Interest A/c

If the cash flow of the asset being depreciated is constant over the life of the asset, then this method is called the annuity method. It is then debited to an asset account and also credited to an interest account, which is then transferred to a profit and loss account.