Balance of the depreciation account is transferred to Profit and Loss A/c.

Monjur Alahi

State whether the following statements are True or False with reason:

Balance of the depreciation account is transferred to Profit and Loss A/c.


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Salim Ahmed Kawsar

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This statement is True.

Depreciation is charged to profit and Loss A/c as it is an element of Cost. It is also essential to arrive at true value of the asset and also net profit or Loss during a particular accounting period. Even if an asset is not in use, its value is reduced due to the passage of time. Depreciation is Cost/Loss to the business. It is a noncash expenditure.

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