Depreciation, Provisions and Reserves

Greetings to fellow blog readers......

1.    Depreciation is charged on :

1. Current assets                                                   2. Fixed assets

3. Both 1 and 2                                                      4. None of these

2.    Depreciation is charged on :

1. Book value                                                        2. Net value

3. Market value                                                     4. All of the above

3.    Which of the following is the main causes of depreciation ?

1. Wear and tear                                                   2. Economic factors

3. time factors                                                       4. Depletion

5. all of the above

4.    Depreciation applies to :

1. Wasting assets                                                  2. Fixed assets

3. Intangible assets                                               4. Buildings

5.    Depletion applies to :

1. Fixed assets                                                      2. Wasting assets

3. Intangible assets

4. To damage due to a building or other property during tenancy

                 

6.    A mortiation applies to … assets ?

1. Intangible assets                                               2. Fixed assets

3. wasting assets                                                   4. None of these

7.    Dilapidation’s applies to ?

1. fixed assets                                                       2. Wasting assets

3. to damage due to a building or other property during tenancy

4. none of these

8.    Which of the following is refers to cost allocations for natural resources such as oil and mineral deposits ?

1. Depreciation                                                      2. Depletion

3. Amortization                                                      4. Dilapidation’s

9.    Depreciation is the Process :

1.    of allocation of cost of the asset to the period of its life

2.    of valuation of assets

3.    of maintenance of an asset in a asset of efficiency

4.    none of these

10.  Why the depreciation is calculated :

1.    To know the true profits

2.    To show true financial position

3.    To make provision for replacement of assets

4.    All of these

11.  Which of the following is the methods of recording depreciation’s ?

1.    when a provision depreciation account is not maintained.

2.    When a provision for depreciation account is maintained

3.    Both 1 and 2

4.    None of these

12.  The depreciation’s account, begin nominal account is transferred to :

1. trading account                                                 2. Profit and loss account

3.Profit and loss preparation account                   4. Balance sheet

13.  Provision for Depreciation Account is shown in balance sheet ?

1. liabilities side                                                     2. Assets side

3. and deferred revenue expenditure                   4. None of these

14.  Straight line method is also known as …

1.    Fixed installment method

2.    Fixed percentage on original cost method

3.    Both 1 and 2

4.    None of these

15.  Straight line depreciation method formula is :

1.    Depreciation = Cost price of asset – Scrap value / estimated life of asset

2.    Depreciation = Cost of assets + Scrap value / life time

3.    Depreciation = cost price of assets – scrap value / Total cost of assets

4.    None of these

16.  Machine cost Rs.11,000 is estimated to have a life of 10 years and the scrap value is estimated Rs.1,000 at the end of its life, the amount of depreciation would be ?

1. Rs.2,000                        2. Rs.1,000                  3. Rs.1,500                  4. Rs.1,100

17.  Diminishing balance method is also known as :

1. reducing method                                               2. Written down value method

3. reducing installment method                             4. All of the above

18.  Diminishing balance method is usually adopted for :

1. Plant and machinery                                         2. Building

3. Land                                                                  4. Furniture

19.  Which of the following method is recognized by the income tax authorities in India:

1. Straight line method                                          2. Diminishing balance method

3. insurance method                                             4. Sinking fund method

 

20.  Which of the following method assets value never becomes nil ?

1. Diminishing balance method                            2. Fixed installment method

3. Fund method                                                     4. Annuity method

ANSWERS

            1.2       2.1       3.5       4.2       5.2       6.1       7.3       8.2       9.1       10.4     11.3     12.2

13.1     14.3     15.1     16.2     17.4     18.1     19.2     20.1