The main objective of providing depreciation is to
A. Calculate the true net profit
B. Compute the actual cash profit
C. Create funds for replacement of fixed assets
D. Reduce tax burden
Answer: Option C
Solution(By Examveda Team)
The main objective of providing depreciation is to Create funds for replacement of fixed assets. The main objective of charging depreciation is to accumulate adequate fund to replace old asset with the new one after the useful life. Depreciation is charged to fixed assets which helps to show the current value of the asset.This Question Belongs to Commerce >> Accounting
Join The Discussion
Comments ( 3 )
Accounting provides information on
A. Cost and income for managers
B. Company's tax liability for a particular year
C. Financial conditions of an institutions
D. All of the above
The long term assets that have no physical existence but are rights that have value is known as
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
The assets that can be converted into cash within a short period (i.e. 1 year or less) are known as
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
Patents, Copyrights and Trademarks are
A. Current assets
B. Fixed assets
C. Intangible assets
D. Investments
Option A is correct
the main objective of providing depreciation is to = show true net profit position by avoiding inflating or deflating the net profit.
providing funds for replacement of asset is the secondary objective
Option a is correct.