Question

Depreciation is loss in value of ________
A) Final goods B) Machinery C) Capital stock D) Stock of inventory

Answer 1

Explanation:

Depreciation is loss in value of Capital Stock.

Answer 2

Depreciation is loss in value of ________

A) Final goods B) Machinery C) Capital stock D) Stock of inventory

The correct option is :

B) Machinery

Explanation ⦂

Depreciation refers to the reduction in the value of an asset due to a permanent decline in market value. When there is a physical deterioration of an asset or there is a decrease in its value, it is called depreciation. Assets include both movable and immovable assets, such as machinery, buildings, furniture, goods, etc. That is why loss in the value of machinery is considered in the context of depreciation. Final Goods, Capital Stock, and Inventory Stock are not depreciation-related elements.

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Know something more...

Which of the following is not an example of physical capital

a. machinery

b. raw material

c. building

d. education and knowledge in people

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When a machinery is purchased for cash, the cash balance is reduced and to that extent, the amount of machinery as an asset is recorded. This is done to follow which of the following accounting principles:

1) Dual Aspect Principle

2) Materiality Principle

3) Timeliness Principle

4) Consistency Principle

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