Accountancy, asked by aparnakaser22, 4 months ago

what is depreciation why is arrangement for depreciation is necessary

Answers

Answered by sahiljoshi07072004
0

Explanation:

When an accountant prepares the accounts of a firm and jots down the amount of depreciation, he brings down the potential gains of the firm. The amount of depreciation is an expense for an entity. Thus, it is imperative to make the correct and accurate calculations. Let us understand what is depreciation and why we need to provide for it.

Depreciation needs to be provided because an asset is bound to undergo wear and tear over a period of time. This reduces the working capacity and effectiveness of the asset. Hence, this should reflect the value of the asset, at which it is carried in the books of accounts.

Also, every asset becomes obsolete over a period of time, as new technology and innovation take over. The value of the asset will hence decrease over time and this must be accounted for.

Answered by gouthamreddy312006
0

THE MONETARY VALUE OF AN ASSENT DECREASE OVERTIME DUE TO USE IS CALLED DEPRECIATION.

HOPE IT WILL HELP YOU.

Similar questions