A common misconception is that depreciation is:

Type: MCQ • Marks: 1

A. A non-cash expense

B. A systematic allocation

C. A cash reserve automatically accumulated for replacement

D. Related to useful life

Explanation

Depreciation and a depreciation reserve/fund should not be confused. Recording depreciation does not itself place cash into a separate bank account.

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UPSC Principal & Vice Principal Management Finance Administration

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