Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 18 - No. 27)
What is the primary purpose of adjusting for depreciation?
To increase the value of assets.
To allocate the cost of an asset over its useful life.
To determine the resale value of an asset.
To reduce tax liability.
Explanation
Depreciation spreads the cost of an asset across its lifespan to accurately reflect its use in generating revenue.
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