alleryStart learning →Charging depreciation on fixed assets has what effect on net profit?
AIncreases it
BDoubles it
CNo effect
DDecreases it
Answer & Solution
Correct answer: D. Decreases it
Depreciation is an expense, so charging it lowers net profit.
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Net income is also calledRs 36,000 rent for 12 months is received on 1 January. At the 31 March year end, unearned Investment interest of Rs 12,000 a year is received for nine months only. Accrued income aMachine costing Rs 2,00,000 is bought on 1 October; depreciation 15% a year on cost, year Current assets are Rs 4,80,000 and current liabilities Rs 3,10,000. Net current assets arePurchases Rs 4,00,000, purchase returns Rs 25,000, carriage inwards Rs 5,000. Net cost of Gross sales Rs 6,40,000 and sales returns Rs 15,000. Net sales areCost of goods sold is Rs 6,50,000 and net sales Rs 6,20,000. The result is