NCERT · Class 11 · Accountancy · Depreciation, Provisions and ReservesWhat is depreciation?
Step-by-Step Solution
Depreciation is the permanent, continuous, and gradual decrease in the book value of fixed assets due to use, efflux of time, obsolescence, or accident.
Detailed Options Breakdown
Option : Increase in the value of asset
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Depreciation, Provisions and Reserves.
Option 1: Decrease in the book value of fixed assets (Correct Answer)
Correct choice. Refer to the step-by-step verified solution guidelines above for details.
Option 2: Fluctuation in current assets
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Depreciation, Provisions and Reserves.
Option 3: Increase in liabilities
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Depreciation, Provisions and Reserves.
💡 Study Guide: This question tests core syllabus concepts from Depreciation, Provisions and Reserves. For formulas, key summaries, and mock exam reference guides, read the full Depreciation, Provisions and Reserves Revision Notes.