S1: Depreciation is a non-cash expense. S2: Depreciation reduces the book value of the asset. Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: Depreciation is a non-cash expense. S2: Depreciation reduces the book value of the asset. Which statement(s) is/are correct?
A. Both S1 and S2
B. Neither S1 nor S2
C. S2 only
D. S1 only
Answer: Option A
Solution (By JKSSB Mock Tests)
Depreciation is charged to the Profit and Loss Account but does not involve any cash outflow, making it a non-cash expense. It is also credited to the Provision for Depreciation or Asset account, reducing its book value. Both are correct.
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