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How is depreciation treated in the final accounts of a partnership?
How is depreciation treated in the final accounts of a partnership?
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Practice Questions
1 question
Q1
How is depreciation treated in the final accounts of a partnership?
As an expense in the profit and loss account
As an asset in the balance sheet
As a liability in the balance sheet
Not considered in final accounts
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Depreciation is treated as an expense in the profit and loss account, reducing the net profit of the partnership.
Questions & Step-by-step Solutions
1 item
Q
Q: How is depreciation treated in the final accounts of a partnership?
Solution:
Depreciation is treated as an expense in the profit and loss account, reducing the net profit of the partnership.
Steps: 5
Show Steps
Step 1: Understand what depreciation is. It is the reduction in value of an asset over time.
Step 2: Know that partnerships have financial statements, including a profit and loss account.
Step 3: Recognize that depreciation is recorded as an expense in the profit and loss account.
Step 4: Understand that recording depreciation as an expense reduces the total profit of the partnership.
Step 5: Remember that this reduction in profit affects how much profit is shared among partners.
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