Accounting for IGCSE & O level - Accounting Procedures (Section 1 - No. 22)

What is the main purpose of depreciation in financial accounting?

To reflect the current market value of an asset.

To accurately report the decline in value of an asset over time.

To reduce a company's tax liability.

To simplify the financial statements.

Depreciation's main purpose is to reflect the decline in value of an asset.