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JAMB Principles of Accounts 2004 Question 12

Question 12

Depreciation

The balance on the provision for depreciation account is

  1. A.added to fixed assets on the balance sheet
  2. B.deducted from fixed assets on the balance sheet
  3. C.deducted from the profit and loss account
  4. D.added to the current liabilities of the account
Show the answer and explanation

Answer: B (deducted from fixed assets on the balance sheet)

Explanation

Accumulated depreciation is subtracted from the cost of the fixed asset on the balance sheet to give its net book value.