Question

The decrease in the value of the power plant / electrical equipment and building due to constant use is known as:
1. Annual maintenance cost
2. Interest
3. Annual operating cost
4. Depreciation

Answer 1

Correct Answer - Option 4 : Depreciation

Common terminology of a power plant:

• The process of determining the cost per unit (i.e. cost of 1 kWh) of energy is known as the economics of power generation.
• The cost of the use of money is known as interest.
• The decrease in the value of the power plant equipment and building due to constant use is known as depreciation.
• The reduction in the value of the plant every year is known as annual depreciation.
• Fixed cost = The annual cost of a central organization, interest on the capital cost of land and salaries of high officials.
• Running cost = It is the cost that depends only upon the number of units generated.
• The running cost is on account of annual cost of fuel, lubricating oil, maintenance, repairs and salaries of operating staff.
• Account Maintenance Charge (AMC) is the cost to maintain your demat account.
• Operating cost = The expenses which are related to the operation of a business, or to the operation of a device, component, piece of equipment or facility.