📝 Multiple Choice Question
Economics
Which of the following statements is correct regarding Depreciation? I. Depreciation is termed as loss of value of fixed assets due to wear and tear during its useful life. II. Depreciation does not take into account unexpected or sudden destruction.
A
Only II
B
Neither I nor II
C
Both I and II
D
Only I
Explanation
In strict national income accounting, depreciation heavily accounts for the completely regular wear and tear of physical capital goods during normal production, but it specifically and intentionally excludes sudden loss of value from unforeseen catastrophic events.
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