Economics · Depreciation, Provisions and Reserves
What is the relationship between providing for depreciation and the profit earned by a business?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1Depreciation is not accounted for when there is a net profit, and it is considered only during liquidation.
- 2Depreciation is only calculated when profits exceed a certain threshold to save on corporate tax.
- 3Depreciation is a charge against profit and must be provided irrespective of whether there is a profit or a loss.✓
- 4Depreciation is an appropriation of profit and is provided only if the business earns a profit.
Correct answer
Depreciation is a charge against profit and must be provided irrespective of whether there is a profit or a loss.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Economics?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Depreciation, Provisions and Reserves MCQs →Want more practice questions on Depreciation, Provisions and Reserves?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Economics · Depreciation, Provisions and Reserves