Question

Which of the following statements is/are false?
I. The term 'depreciation', 'depletion' and 'amortization' have same meaning
II. Provision for depreciation A/c is debited when provision for depreciation is created.
III. The main purpose of charging the Profit and Loss A/c with the amount of depreciated is to spread the cost of an asset over its useful life.

• A. Only (I)
• B. Only (II)
• C. Only (III)
• D. All (I), (II) and (III)

Answer 1

Answer: (B)

Only (II)

Provision for depreciation has credit balance. Therefore, it should be credited when it is created.