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What is the effect of depreciation on the final accounts of a partnership firm?
What is the effect of depreciation on the final accounts of a partnership firm?
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Practice Questions
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Q1
What is the effect of depreciation on the final accounts of a partnership firm?
Increases net profit
Decreases net profit
No effect on net profit
Increases total assets
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Depreciation is an expense that reduces the net profit of the partnership firm in the final accounts.
Questions & Step-by-step Solutions
1 item
Q
Q: What is the effect of depreciation on the final accounts of a partnership firm?
Solution:
Depreciation is an expense that reduces the net profit of the partnership firm in the final accounts.
Steps: 5
Show Steps
Step 1: Understand what depreciation is. It is the reduction in value of an asset over time.
Step 2: Recognize that depreciation is considered an expense for the partnership firm.
Step 3: Know that expenses reduce the total profit of the firm.
Step 4: Realize that when depreciation is recorded, it lowers the net profit shown in the final accounts.
Step 5: Conclude that the effect of depreciation is a decrease in the net profit of the partnership firm.
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