Tuesday, 31 January 2012

Depreciation, Provisions and Reserves-1

Greetings to fellow blog readers......


1.    In which of the method interest is calculated on the debit balance of the asset amount at the beginning of the year ?
1. sum of the digits method                                  2. Annuity method
3. depreciation fund method                                 4. Diminishing method

2.    Depreciation fund account appears on the liabilities side and the depreciation fund investment account will be :
1. Profit and loss a/c                                             2. Balance sheet in liabilities side
3. assets side in balance sheet                             4. None of these

3.    In which of the method depreciation charged is cost plus interest in Profit and loss a/c :
1. annuity method                                                 2. Diminishing method
3. fixed installment method                                   4. Sum of the digits method

4.    Service hours method of providing depreciation (straight line method) is useful, when :
1.    Output can be effectively measured
2.    Utility of the asset is directly related to its productive use
3.    Provide for depreciation is also to accumulate the amount for its replacement
4.    Use of an asset can be measured in terms of time

5.    Depreciation fund method is designed to :
1.    only provide for depreciation of an asset
2.    provide for depreciation is also to accumulate the amount for its replacement.
3.    Provide for the payment of some liabilities
4.    None of these

6.    The profit on depreciation policy is transferred to :
1. depreciation fund account                                2. Asset account
3. profit and loss account                                      4. None of these

7.    Makes provision for the replacement of the asset :
1. written down value method                               2. Annuity method
3. sinking fund method                                         4. Revaluation method

8.    Makes an estimate of the units of output the asset is likely to produce in its life time :
1. Straight line method                                          2. Diminishing method
3. annuity method                                                 4. None of these

9.    Interest is debited to asset account in :
1. depreciation fund method                                 2. Annuity method
3. insurance policy method                                   4. None of these

10.  Under annuity method, the amount of depreciation is :
1. increasing every year                                       2. Decreasing every year
3. fixed for all the years                                        4. None of these

11.  Any profit or loss on the sale of sinking fund investments is transferred to :
1.profit and loss a/c                                               2. Asset a/c
3. sinking fund a/c                                                 4. None of these

12.  Which of the following is the depreciation calculating method ?
1. Straight line method                                          2. Diminishing method
3. Annuity method                                                 4. None of these

13.  Asset cost is Rs.10,000; establishment charges Rs.5,000, assets life time is 10 years, depreciation will be :
1. Rs.1,500                        2. Rs.2,000                  3. Rs.1,000                  4. Rs.500

14.  Asset value is Rs.20,000, life time of asset is 10 years but Depreciation will be :
1. Rs.2,000                        2. Rs.1,000                  3. Rs.2,500                  4. None of these

15.  Asset value Rs.50,000 Rate of Depreciation is 10%, Second year ending what is the value of asset is … (In straight line method).
1. Rs.40,500                      2. Rs.40,000                3. Rs.45,000                4. Rs.50,000

16.  In diminishing method, asset value Rs.45,000, Rate of Depreciation is 10%, what is the value of third year ending :
1. Rs.40,500                      2. Rs.32,805                3. Rs.45,000                4. Rs.36,450

17.  Takes into account the total life of the asset (in hours) for calculating depreciation is :
1. Written down value method                              2. Annuity method
3. Depletion method                                              4. None of these

18.  For providing depreciation on hand tools, the appropriate method of depreciation is :
1. Replacement method                                       2. Revaluation method
3. Depletion method                                              4. None of these

19.  In case of insurance of policy methods the depreciation is credited to … account
1. Asset                                                                 2. Depreciation fund
3. Profit and loss                                                   4. Depreciation

20.  In case of depreciation fund method, the balance of depreciation fund account is transferred to :
1. General reserve                                                2. Asset account
3. Specific reserve                                                4. None of these

ANSWERS
1.2     2.3     3.1     4.4 5.2     6.1    7.3     8.4     9.2    10.3     11.3     12.1     13.1     14.1     15.2     16.2 17.4     18.2     19.2     20.2

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