Depreciation Quiz

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What does depreciation in accountancy refer to?

Reduction in the fair value of an asset and allocation of original cost to periods of use

How does depreciation affect the balance sheet of a business?

It decreases the value of the asset on the balance sheet

Why do businesses depreciate long-term assets?

For both accounting and tax purposes

What is the impact of depreciation on the income statement?

It affects the net income reported on the income statement

How is the cost of a tangible asset allocated through depreciation?

As depreciation expense among the periods in which the asset is expected to be used

Test your knowledge of accounting principles with this quiz on depreciation. Explore the concept of asset value reduction and the allocation of costs in accounting statements.

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