PRC-1 · Chapter 10 · Question 37 of 100
What is the effect of recording a depreciation expense at year-end?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) It decreases the carrying amount of non-current assets and decreases net profit.
Explanation
Depreciation is an expense (reducing profit) that represents the systematic allocation of a tangible asset's cost over its useful life. It is credited to Accumulated Depreciation, reducing the asset's net book value.
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