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Question
Answer in One Sentence:
What is Depreciation?
Solution
Continuous, gradual and permanent decrease in the value of a fixed assets due to factors like wear and tear, passage of time, etc. is known as Depreciation.
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Following is the Receipts and Payments account of Neyveli Science Club for the year ended 31st December, 2018.
| Dr. | Receipts and Payments Account for the year ended 31st December, 2018 | Cr. | ||
| Receipts | ₹ | Payments | ₹ | ₹ |
| To Balance b/d | By Balance b/d | |||
| Cash in hand | 2,400 | Bank overdraft | 1,000 | |
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| 29,600 | 29,600 | |||
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| Assets | (₹) | Liabilities | (₹) |
|
Building |
20,000 |
Bills Payable | 18,000 |
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| Debtors | 30,000 | Outstanding Wages | 1,250 |
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| ₹ | |
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| Net sales | 11,00,000 |
| Net purchases | 6,00,000 |
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| Administration expenses | 45,000 |
| Selling and distribution expenses | 65,000 |
| Loss due to fire | 20,000 |
| Closing stock | 70,000 |
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| ₹ | |
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| Net purchases | 6,00,000 |
| Direct expenses | 45,000 |
| Administration expenses | 45,000 |
| Selling and distribution expenses | 65,000 |
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| Closing stock | 70,000 |
