Which one of the following statements is not correct ........

General Accounting Principles Others

Which one of the following statements is not correct ?

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EPFO EO AO 2023

Depreciation is a non-cash expense.

Depreciation is the process of valuation of assets

The main cause of depreciation is wear and tear caused by usage.

Depreciation must be charged so as to ascertain true profit or loss of a business.

Depreciation in accounting refers to:

- Option 1: Correctly signifies depreciation as a non-cash expense, reflecting allocation of asset cost over time.

- Option 2: Incorrectly describes depreciation as a valuation process. It's actually more about cost allocation than current asset value assessment.

- Option 3: Correctly identifies wear and tear as a primary depreciation cause, affecting asset utility.

- Option 4: Accurately captures the role of depreciation in determining actual business profit or loss, accounting for asset cost over time.

Option 2 is the correct choice

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