Question

Depreciation causes
(a) Outflow of Cash
(b) Sale of Assets
(c) Decrease in book value of Assets
(d) Increase in market value of Assets

Answer 1

option Aoutflow of cash

Answer 2

Depreciation causes a decrease in the book value of Assets.

• When an asset is bought it has a certain percentage by which it will depreciate every year until it becomes obsolete.
• Depreciation is caused by the wear and tear of the asset.
• We can calculate depreciation with methods such as the Straight Line Method and the Diminishing Value Method.