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

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     

Trial Balance, Rectification of Errors and Final Accounts Multiple Choice-2

Greetings to fellow blog readers......

1.    An entry of Rs.600 was wrongly posted to wages account instead of machinery account, as wages are to be capitalized it is an error of :

1. Omission                                                           2. Commission

3. Principle                                                            4. Clerical error

2.    A customer’s cheque returned dishonoured is recorded in :

1. purchase return book                                        2. Sales return book

3. cash book                                                         4. Journal

3.    The main purpose of preparing a trial balance is :

1.    to prepare a summary of all the balance

2.    to compare the debit balance with credit balance

3.    to locate all types of errors

4.    to check the arithmetic accuracy of the ledger accounts

4.    Which of the following errors is revealed by trial balance ?

1.    wrong amount entered in the book of original entry

2.    wrong amount entered in a ledger account

3.    complete omission of an entry from the book of original entry

4.    all of the above

5.    Which of the following errors will cause the trial balance to be out of balance ?

1.    the total of the purchase book is Rs.1,000 short

2.    goods received back from Mahesh, Rs.250 have not been entered in the returns inward book

3.    a purchase of Rs.25 from Gopal and Co. has been entered in the purchase book as Rs.251.

4.    none of these

6.    Which of the following errors are revealed by the trial balance ?

1.    treating an expense as an asset        

2.    posting an amount on the correct side but in the wrong account

3.    compensating errors

4.    none of these

7.    Cash sales of Rs.2,520 was posted as 2,250 the rectifying entry will be –

1.    Cash a/c – Dr.170 – To Sales a/c – 170

2.    Suspense a/c – Dr.170 – To Sales a/c – 170

3.    Cash a/c – Dr.170 – To Suspense a/c – 170

4.    None of these

8.    Purchased goods for the personal use of the proprietors Rs.1,300, debited to purchase account, the rectifying entry will be :

1.    Suspense a/c – Dr. 1,300 – To Purchase a/c – 1,300

2.    Drawing a/c – Dr.1,300 – To Cash a/c – 1,300

3.    Drawing a/c – Dr. 1,300 – To Purchase a/c – 1,300

4.    None of these

9.    The difference between trial balance where to put :

1. Personal a/c                                                      2. Impersonal a/c

3. nominal a/c                                                       4. Suspense a/c

10.  If trial balance on the debit side is short, then :

1.    Suspense a/c need not be opened

2.    Suspense a/c is opened with debit short balance

3.    Suspense a/c is opened with credit balance

4.    None of these

11.  If trial balance is short on credit side  :

1.    open the suspense a/c with debit balance

2.    open the suspense a/c with credit balance

3.    need not to open account

4.    none of these

12.  Rs.100 received from Ravi, Shiva had been posted to Raju Shiva account. … will be rectified entry :

1.    Raju Shiva a/c – Dr. 1000 – To Ravi Shiva a/c – 100

2.    Suspense a/c – Dr.100 – To Shiva a/c – 100

3.    Raju a/c – Dr.100 – To Ravi a/c – 100

4.    None of these

13.  The balance of the petty cash is :

1. an expense                                                       2. An income

3. an asset                                                             4. None of these

14.  Fixed assets are :

1.    kept in the business for use over a long time for earning income

2.    meant for resale

3.    meant for conversion into cash as quickly as possible

4.    none of these

15.  Goodwill is :

1. a current asset                                                  2. Intangible assets

3. tangible asset                                                    4. Fixed assets

16.  Current liabilities are such obligations which are to be satisfied :

1. within one year                                                  2. Within two year                  

3. Within three year                                               4. More than five years

17.  Which is the following is the current liabilities ?

1. creditors                                                            2. Bills payable a/c

3. unclaimed dividend                                           4. All of the above

18.  Out of the following, the example of a current asset is :

1. surrender value of life insurance policy            2. Discount on debenture

3. bill receivable                                                    4. None of these

19.  Stock is :

1. a current assets                                                2. Intangible assets

3. included in the category of fixed assets           4. None of these

20.  Profit and loss account is :

1. personal account                                              2. Real account

3. nominal account                                               4. None of these

21.  Profit and Loss account shows :

1. financial position of the concern                       2. Net profit earned

3. the net gross profit earned                                4. The gross profit earned

22.  Trading account shows :

1. gross profit                                                        2. Cost of goods sold

3. gross loss                                                          4. All the above

23.  GP = net sales - ?

1. net purchase                                                     2. Gross expenses

3. cost of goods sold                                             4. None of these

24.  Closing stock is valued at :

1. cost                                                                   2. Market value

3. cost or market price which ever is lower          4. All the above

25.  Manufacturing account is prepared :

1.    to ascertain the profit or loss on the goods purchased

2.    to ascertain the cost of the manufactured goods

3.    to show the sale proceeds from the goods produced during the year

4.    none of these

26.  Goods purchased were for Rs.12,000 and goods remain unsold Rs.2,000. In such a case, the cost of goods sold will be :

1. Rs.2,000                        2. Rs.14,000                3. Rs.10,000                4. Rs.12,000

27.  Opening stock is Rs.5,000 wage were Rs.2,500 and goods purchased Rs.20,000 net sales is Rs.15,000 closing stock is Rs.20,000, than what is the value of gross profit ?

1. Rs.7,000                        2. Rs.5,000                  3. Rs.7,500                  4. Rs.12,000

28.  Opening stock Rs.10,000 purchases (net) Rs.75,000 direct expenses Rs.5,000, closing stock Rs.15,000 and sales (net) Rs.1,00,000. The value of cost of goods sold will be :

1. Rs.70,000                      2. Rs.75,000                3. Rs.60,000                4. Rs.72,000

29.  Above mentioned example the value of gross profit is :

1. Rs.20,000                      2. Rs.22,000                3. Rs.29,000                4. Rs.25,000

30.  Manufacturing Account concern to … A/c

1. Profit and loss a/c                                             3. Trading a/c

3. Both 1 and 2                                                      4. None of these

ANSWERS

            1.3       2.3       3.4       4.2       5.1       6.4   7.2       8.3       9.4       10.2     11.2     12.1     13.3     14.1     15.2     16.1     17.4     18.3  19.1     20.3     21.2     22.3     23.3     24.3     25.2     26.3     27.3     28.2     29.4     30.2