Choose the incorrect statement (s) from below.
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: Net Investment = Gross investment + Depreciation
Option 1: Depreciation does not take into account unexpected or sudden destruction or disuse of capital. It is correct. Depreciation does not take into account unexpected or sudden destruction or disuse of capital as can happen with accidents, natural calamities or other such extraneous circumstances.
Option 2: Net Investment = Gross investment + Depreciation. This is incorrect. Net Investment = Gross investment – Depreciation