Question

Depreciation is _____ in profit with time. 1. Decrease 2. Increase 3. No change 4.Slight increase or decrease

Answer 1

Answer:

Depreciation is decrease in profit with time.

Answer 2

As depreciation expenses increase, the profit of a firm or company decreases.Hence, the correct answer is Decrease or option 1.

Explanation:

Depreciation basically refers to a decline in the useful life of an asset employed by a company or firm for production process.With the useful life of an asset, its productive or operative capacity decreases through wear and tear and consequently, it looses value which is reflected by depreciated market value.Now these depreciation expenses are not registered as upfront expenses and does not affect the cash flow of the company.However, in the income statement of the company,any depreciation expense would reduce the estimated profit or income as it is considered as a cost or expense.