Which of the Following Is the Main Reason for Depreciating

question 29

Multiple Choice

Which of the following is the main reason for depreciating non-current assets?

• A) To show consumption of economic benefits
• B) To enable a business to continue production
• C) To lessen the losses suffered by businesses
• D) To set aside funds for the replacement of assets

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Definitions:

Time Value

The principle stating that having money now is preferable to the same sum later, owing to the earnings it could potentially accrue.

Disadvantage

refers to a unfavorable condition or position that reduces the chances of success or effectiveness.

Average Accounting Return

A financial ratio that compares the average annual net income of an investment to its initial cost to assess its profitability.

Accounting Basis

The method in which income and expenses are recognized in the accounts; common methods include cash basis and accrual basis accounting.