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State whether the following statement is True or False with reasons: Depreciation need not be charged when business is making losses. - Book Keeping and Accountancy

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Question

State whether the following statement is True or False with reasons:

Depreciation need not be charged when business is making losses.

Options

  • True

  • False

MCQ
True or False
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Solution

This statement is False.
Depreciation is an element of cost which is to be calculated/charged irrespective of profit or loss of the business. Also, to find actual profit or loss of the business, it is compulsory to calculate depreciation.
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Chapter 7: Depreciation - Exercises [Page 243]

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