Accounting concept: What is “depreciation”? Choose the most accurate description in the context of fixed assets and financial reporting.
General Knowledge
Indian Economy
Difficulty: Easy
Choose an option
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AAppreciation due to market demand
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BA gradual reduction in the value of a fixed asset due to wear and tear, usage, or obsolescence
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CCash kept aside for emergencies
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DA tax levied on assets
Answer
Correct Answer: A gradual reduction in the value of a fixed asset due to wear and tear, usage, or obsolescence
Explanation
DefinitionDepreciation is the systematic allocation of the depreciable amount of a tangible asset over its useful life, reflecting wear, tear, and obsolescence.
Final AnswerA gradual reduction in the value of a fixed asset due to wear and tear, usage, or obsolescence