Which of the following statements about depreciation are correct?
A.Depreciation is a way of allocating the cost of a non-current asset to the accounting periods that benefit from its use.
B. Depreciation helps to set aside sufficient cash to buy a replacement once the asset is worn out.
A)Neither of them
B)B only
C)A only
D)Both of them

Question

Which of the following statements about depreciation are correct? 
A.Depreciation is a way of allocating the cost of a non-current asset to the accounting periods that benefit from its use. 
B. Depreciation helps to set aside sufficient cash to buy a replacement once the asset is worn out.
A)Neither of them
B)B only
C)A only
D)Both of them

Quizplus · Accepted Answer

A is correct because depreciation spreads the cost of a tangible asset over its useful life, reflecting the consumption of the asset. B is incorrect because depreciation is an accounting process and does not involve setting aside cash for future purchases.

Which of the Following Statements About Depreciation Are Correct