Which of the following statements best describes the purpose of depreciation?

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Which of the following statements best describes the purpose of depreciation?(a)Regular reduction of asset value to correspond to change in market value as perasset age(b)A process of correlating the market value of an asset with its gradual decline inphysical efficiency.(c)Allocation of cost of an asset to the period in which services are received from theasset(d)None of the aboveQ4 The main objective of providing depreciation is to:(a)To calculate the true profit(b)Show the true financial position in the balance sheet(c)Reduce tax burden(d)Both (a) & (b) aboveQ5 Depreciation is a process of(a)Valuation(b)Valuation & Allocation(c)Allocation(d)AppropriationQ6 The portion of the acquisition cost of the asset yet to be allocated is known as:(a)Written down value(b)Salvage value(c)Net Realizable value(d)Accumulated valueQ7 Which of the following statements is true with regard to written down value methodof depreciation?i. The rate at which the asset is written off reduces year after yearii. Theamount of depreciation provided reduces from year to yeariii. The rate of depreciation aswell as the amount of depreciation reduce year after yeariv. The value of the asset getsreduced to zero over a period of time.(a)Only (i)(b)Only (ii)(c)Both (i) & (iii)(d)Both (iii) & (iv)Q8 The accounting process of gradually converting the unexpired cost of fixed assets intoexpenses over a series of accounting periods is:(a)Depreciation(b)Physical deterioration of the asset(c)Decrease in market value of the asset(d)Valuation of asset at a point of time

Which ofthe following statements best describes the purpose of depreciation?(a) Regular reduction of asset value to correspond to changes in marketvalue as the asset ages(b) A process of correlating the market value of an asset with its gradualdecline in physical efficiency(c) Allocation of cost in a manner that will ensure that Plant andEquipment items are not carriedon the Balance Sheet in excess of net realizable value(d) Allocation of the cost of an asset to the periods in which services arereceived from the asset[Hints: (d) AS-6 defines depreciation as a measure of the wearingout, consumption or other loss ofvalue of a depreciable asset arising from use, effluxion of time orobsolescence through technology and market changes. Depreciation isallocated so as to change a fair proportion ofthe depreciable amount in each accounting period during theexpected useful life of the asset.Depreciation includes amortization of assets whose useful life ispredetermined. The ultimate outcome of accounting for depreciation iscash available to replace the asset; however this cannot be the purposeof depreciation.]199.The main objective of providingdepreciation is to(a) Calculate the true profit(b) Show the true financial position in the Balance Sheet(c) Provide funds for replacement of fixed assets(d) Both (a) and (b) above[Hints: (d) The main objective of providing depreciation is to find outthe true Net Profit or Loss foran accounting period and to present a true and fair view of thestate of affairs of the business.