Practice Why is Depreciation Necessary? - 18.1.2 | 18. Depreciation Accounting | Management 1 (Organizational Behaviour/Finance & Accounting)
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Knowledge

18.1.2 - Why is Depreciation Necessary?

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is depreciation?

💡 Hint: Think about how assets lose value.

Question 2

Easy

Why is matching costs with revenues important?

💡 Hint: Consider what happens if costs are ignored.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What does depreciation help achieve in accounting?

  • A) Overstate income
  • B) Match asset costs with revenues
  • C) Avoid financial reporting
  • D) None of the above

💡 Hint: Consider why expenses are matched with income.

Question 2

True or False: Depreciation is not required under any accounting standards.

  • True
  • False

💡 Hint: Think about the consequences of ignoring accounting standards.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A company buys a truck for $30,000, with a residual value of $3,000 and a useful life of 5 years. Calculate the annual depreciation using the straight-line method and describe its importance in financial reporting.

💡 Hint: Consider how the truck's value changes over the years.

Question 2

How would a company’s decision to change its depreciation method from straight-line to declining balance affect its financial statements and cash flow management?

💡 Hint: Think about the implications of depreciation on cash flow and income reporting.

Challenge and get performance evaluation