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CPT Section A: Fundamentals of Accounting Chapter-5  
Part 1: Introduction & Basic Concepts 
CA. Poonam Patni 
Page 2


CPT Section A: Fundamentals of Accounting Chapter-5  
Part 1: Introduction & Basic Concepts 
CA. Poonam Patni 
Understand 
the Meaning 
& Need of 
Depreciation 
Causes of 
Depreciation 
Objectives 
of 
Depreciation 
Factors to be 
considered 
for 
Depreciation 
Journal 
Entries for 
Depreciation 
Page 3


CPT Section A: Fundamentals of Accounting Chapter-5  
Part 1: Introduction & Basic Concepts 
CA. Poonam Patni 
Understand 
the Meaning 
& Need of 
Depreciation 
Causes of 
Depreciation 
Objectives 
of 
Depreciation 
Factors to be 
considered 
for 
Depreciation 
Journal 
Entries for 
Depreciation 
Diminution in 
Utility 
Natural Wear & 
Tear 
Exhaustion of 
the Subject 
Matter/Accident 
Efflux of Time 
Obsolescence 
Page 4


CPT Section A: Fundamentals of Accounting Chapter-5  
Part 1: Introduction & Basic Concepts 
CA. Poonam Patni 
Understand 
the Meaning 
& Need of 
Depreciation 
Causes of 
Depreciation 
Objectives 
of 
Depreciation 
Factors to be 
considered 
for 
Depreciation 
Journal 
Entries for 
Depreciation 
Diminution in 
Utility 
Natural Wear & 
Tear 
Exhaustion of 
the Subject 
Matter/Accident 
Efflux of Time 
Obsolescence 
Internal Depreciation 
Natural Wear & T ear 
External Depreciation 
Exhaustion of the subject matter 
Effluxion of time Accident 
Obsolescence 
Page 5


CPT Section A: Fundamentals of Accounting Chapter-5  
Part 1: Introduction & Basic Concepts 
CA. Poonam Patni 
Understand 
the Meaning 
& Need of 
Depreciation 
Causes of 
Depreciation 
Objectives 
of 
Depreciation 
Factors to be 
considered 
for 
Depreciation 
Journal 
Entries for 
Depreciation 
Diminution in 
Utility 
Natural Wear & 
Tear 
Exhaustion of 
the Subject 
Matter/Accident 
Efflux of Time 
Obsolescence 
Internal Depreciation 
Natural Wear & T ear 
External Depreciation 
Exhaustion of the subject matter 
Effluxion of time Accident 
Obsolescence 
Depletion 
Fall in Market Price 
Accidents 
Obsolescence 
Efflux of time 
Wear & Tear due to Actual Use 
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FAQs on PPT : Depreciation Accounting - 1 - Accountancy Class 11 - Commerce

1. What is depreciation accounting?
Ans. Depreciation accounting is the process of allocating the cost of an asset over its useful life. It allows businesses to account for the wear and tear, obsolescence, or other factors that reduce the value of an asset over time.
2. How is depreciation calculated?
Ans. Depreciation can be calculated using various methods, such as straight-line depreciation, declining balance method, or units of production method. The most commonly used method is the straight-line method, which divides the cost of the asset by its useful life to determine the annual depreciation expense.
3. Why is depreciation important in accounting?
Ans. Depreciation is important in accounting as it helps businesses accurately reflect the decrease in value of their assets over time. It allows for the proper matching of expenses with revenues, ensuring that the financial statements provide a true and fair view of the company's financial position.
4. How does depreciation affect the financial statements?
Ans. Depreciation affects the financial statements by reducing the value of the asset on the balance sheet and increasing the depreciation expense on the income statement. This reduces the company's net income and retained earnings, impacting the profitability and overall financial health of the business.
5. Can depreciation be reversed or adjusted in the future?
Ans. Once depreciation has been recorded, it cannot be reversed or adjusted in the future unless there was an error in the original calculation. However, if the estimated useful life or salvage value of an asset changes, the depreciation method can be adjusted to reflect the new information.
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