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2. How would you respond to someone who asked if the amounts shown in Allowance for Depreciation account could be used to pur
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Depreciation is the reduction in the fixed asset's value. Depreciation expense would not involve any cash outflow. Thus, the funds that we charge every year to the Profit and Loss A/c remain in the entity itself and therefore can be used by the business at the time of replacement of fixed assets. The allowances in depreciation provide out of the operations of the business, and main resource to purchase replacement of fixed assets

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