JAMB Accounts Principles of Accounts 2017 Paper

Concept: Depreciation of an office machine is an administrative expense, not a production cost.Explanation:Office machines are used for general administration, not for manufacturing goods.Therefore, their depreciation is not included in the factory or manufacturing cost.All administrative expenses must be deducted from the gross profit in the profit and loss account.Thus, the depreciation is charged to the profit and loss account, not to the trading or manufacturing account.Answer: D. profit and loss account