Question

Which of the following statements is/are false?
I. The term 'depreciation', 'depletion' and 'amortization' convey the same meaning.
II. Provision for depreciation a/c is debited when provision for depreciation a/c is created.
III. The main purpose of charging the profits and loss a/c with the amount of depreciation is to spread the cost of an asset over useful life for the purpose of income determination.

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

Answer 1

The correct option is D All (I), (II) and (III) above

All the statements are false

I - Depreciation, depletion and amortization do not convey the same meaning. It is different for different assets like tangible, intangible assets.

II - Provision for depreciation account is credited when provision for depreciation account is created. Provision for depreciation account is created to accumulate the depreciation on a machinery.

III - The main purpose of charging the profits and loss account with the amount is to charge the cost of asset over the useful life of the asset.