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      Question

      Depreciation is charged on __________ as per the 

      ___________ of accounting.
      A Capital Receipts, accrual concept Correct Answer Incorrect Answer
      B Capital Expenditures, matching concept Correct Answer Incorrect Answer
      C Revenue Receipts , prudence concept Correct Answer Incorrect Answer
      D Revenue Expenditure, going concern concept Correct Answer Incorrect Answer
      E Revenue expense, business entity concept Correct Answer Incorrect Answer

      Solution

      Non-Current assets like fixed assets are a result of Capital Expenditures. Depreciation is charged on long term fixed assets.  Since the Non-Current Assets give the benefits for more than one year therefore, the cost cannot be taken as expense in the year of acquisition. As such, the matching concept is applied to charge depreciation over the useful life of the non-current asset.

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