Which option is a correct example of depreciation?
Answer and explanation
Correct answer: An old machine wearing out due to use
Depreciation is the decline in the value or productive service of a fixed asset because of use, age, normal wear, or obsolescence. An old machine wearing out through use fits this definition. Buying a machine is gross investment, buying food is consumption expenditure, and a scholarship is a transfer payment, so none of those represents depreciation.
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What is the correct answer to this question?
An old machine wearing out due to use
Why is this the correct answer?
Depreciation is the decline in the value or productive service of a fixed asset because of use, age, normal wear, or obsolescence. An old machine wearing out through use fits this definition. Buying a machine is gross investment, buying food is consumption expenditure, and a scholarship is a transfer payment, so none of those represents depreciation.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
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