A-LevelAccountingAccounting for non-current assets9706/12 · Oct/Nov 2017 · Q21 Mark

What is the purpose of depreciation?

Ato allocate the cost of the assets over their lives

Bto improve liquidity ratios of the business

Cto provide sufficient funds to replace the assets

Dto show the assets at their market values

✓ Correct answer

A: to allocate the cost of the assets over their lives

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Topic: Accounting for non-current assets, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, Oct/Nov 2017 Paper 1 Variant 2, question 2.

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