Which statement best describes accumulated depreciation in relation to the asset to which it relates?
Correct answer: A. It is a contra-asset account
- A. It is a contra-asset account
- B. It is a current liability account
- C. It is an income account
- D. It is a capital reserve account
Explanation
Accumulated depreciation is a contra-asset account that reduces the asset's gross carrying amount to arrive at its carrying amount. It is not a liability, income, or a reserve representing distributable capital.
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About Depreciation and Non-Current Assets
Non-current assets are long-term resources recorded at cost and reduced by accumulated depreciation to show their carrying amount. Coverage includes straight-line and reducing-balance methods, residual value, useful life, depreciation adjustments, capital and revenue expenditure, and the profit or loss arising when an asset is disposed of.
Practise Depreciation and Non-Current Assets
33 free Depreciation and Non-Current Assets MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
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