alleryDepreciation is charged primarily to:
AMatch expense to revenue
BIncrease capital reserves
CPay dividends quickly
DReduce closing inventory
Answer & Solution
Correct answer: A. Match expense to revenue
1. Depreciation matches the cost of using an asset against the revenue it helps generate.
2. This adheres to the matching principle of accounting.
3. It does not directly affect reserves, dividends, or inventory.
_Source: ICAI BoS Foundation Paper 1, Ch 5 "Depreciation & Amortisation", §1.3 (1)_
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