O-LevelAccountingAccounting principles and policies7707/11 · Oct/Nov 2018 · Q131 Mark

Why is depreciation charged on a non-current asset?

Ato accumulate a fund of money to replace the asset

Bto charge the cost of using the asset against income

Cto determine the market value of the asset

Dto ensure that profits are not understated

✓ Correct answer

A: to accumulate a fund of money to replace the asset

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Topic: Accounting principles and policies, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, Oct/Nov 2018 Paper 1 Variant 1, question 13.

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