# Which of the following statements best describes the purpose of depreciation? with Answer - Accounting Mcqs | TestPrep

> Solved MCQ: Which of the following statements best describes the purpose of depreciation? Correct Answer: D. Allocation of the cost of an asset to the periods in which services are received from the asset. Verified answer explanation for FPSC, PPSC, MDCAT, NTS, and CSS competitive exam preparation.

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# Which of the following statements best describes the purpose of depreciation?

Direct Answer & Quick Reference

The correct option is **D. Allocation of the cost of an asset to the periods in which services are received from the asset**.

A. Regular reduction of asset value to correspond to changes in market value as the asset ages

B. A process of correlating the market value of an asset with its gradual decline in physical efficiency

C. Allocation of cost in a manner that will ensure that Plant and Equipment items are not carried on the Balance Sheet in excess of net realizable value

D. Allocation of the cost of an asset to the periods in which services are received from the asset **(Correct Answer)**

✨ Explain with AI

Verified Key: D. Allocation of the cost of an asset to the periods in which services are received from the asset
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Verified against official examination board answer keys and standard curriculum textbooks.

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