Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 9 - No. 27)
What impact does depreciation have on the Income and Expenditure Account?
It increases the surplus.
It decreases the deficit.
It is an expense that decreases the surplus (or increases the deficit).
It has no effect as it is a non-cash item.
Explanation
Depreciation is an expense, so it will decrease a surplus or increase a deficit.
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