Hey everyone, I’m a student studying commerce in India and I’m having some trouble with financial accounting. Can someone please help me understand the concept of depreciation in accounting? I would really appreciate any guidance. Thanks!
Depreciation is the systematic allocation of the cost of a fixed asset over its useful life. It recognizes that assets gradually lose value as they are used and become outdated. This process helps in determining the accurate value of the asset over time.
Depreciation is like wear and tear for non-current assets. It is the decrease in value due to factors like usage, passage of time, obsolescence, and wear and tear. It is important in financial accounting as it helps in reflecting the true value of an asset on the balance sheet.
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