CBSE Questions for Class 11 Commerce Accountancy Depreciation, Provision And Reserves Quiz 1 - MCQExams.com

The amount realised at the end of working life of an asset is known as ____________ .
  • Residual value
  • Market price
  • Original cost
  • Written down value
Original cost = Rs. $$1,26,000$$. Salvage value $$=6,000$$. Useful Life $$=6$$ years. Annual depreciation under SLM = ?
  • Rs. $$21,000$$
  • Rs. $$20,000$$
  • Rs $$15,000$$
  • Rs. $$14,000$$
____________ deals with Depreciation Accounting.
  • AS-$$6$$
  • AS-$$7$$
  • AS-$$8$$
  • AS-$$2$$
On 1.8.2012 K Ltd. bought four Matador Vans costing Rs. $$1,20,000$$ each. The company expected to fetch a scrap value of $$25$$% of the cost price of the vehicles after $$10$$ years. The vehicles were depreciated under the fixed instalment method upto 31.3.The rate of depreciation charged upto 31.3.2015 = ?
  • $$10.0$$%
  • $$9.0$$%
  • $$8.5$$%
  • $$7.5$$%
The depreciation method that is best suited for a machine that is being used on an hourly basis will be ________.
  • depletion method
  • double declining method
  • declining method
  • service house method
Depreciation value of an asset is equal to:
  • Cost + Scrap value
  • Cost + Market price
  • Cost - Scrap value
  • None of these
Sinking funds is created for___________.
  • redemption of long term liabilities
  • replacement of depreciable assets
  • both (A & B)
  • none of the above
______________ of an asset includes invoice price and other cost.
  • Cost price
  • Installation cost
  • Market value
  • Financial cost
Written Down value Method is also known as _____________.
  • Reducing balance method
  • Straight line method
  • Fixed installment method
  • Zero installment method
Depreciation is _______________ process.
  • Stable
  • Continuous
  • Rigid
  • Flexible
_________________ includes amortisation of assets whose useful life is pre-determined.
  • Appreciation
  • Depreciation
  • Valuation
  • Validation
The term depletion is used in relation to ___________.
  • Fixed assets
  • Wasting assets
  • Current assets
  • Intangible assets
The Diminishing Balance Method of providing depreciation states ______________.
  • The amount on which depreciation is provided is reduced from year to year
  • The rate per cent and also the amount are reduced from year to year
  • The rate per cent at which depreciation is written of goes on declining from year to year
  • None of the above
Which method of depreciation is suitable when expenditure on repairs and maintenance increases as the machine grows old?
  • Reducing Balance Method
  • Straight Line Method
  • Machine Hour Rate Method
  • Sinking Fund Method.
Depletion method is normally applied in case of _________ assets.
  • Intangible
  • Tangible
  • Wasting
  • Current
For depreciation mines, the suitable method is:
  • Straight Line
  • WDV
  • Depletion
  • Annuity Method
Depreciation is deducted from the concerned _________.
  • Liability
  • Asset
  • Expense
  • Income
If the present cost of the car is $$Rs. 1,00,000$$ residual value at the end of the 5th year is $$Rs. 20,000$$, the monthly depreciation is _________.
  • $$Rs. 20,000$$
  • $$Rs. 16,000$$
  • $$Rs. 1,333$$
  • $$Rs. 17,333$$
Wages paid for erection of machinery are debited to ____________.
  • Wages Account
  • Machinery Account
  • Profit and Loss Account
  • Deferred Wages Account
In purchase method, the excess of net asset of the transferor company acquired by the transferee company over the purchase consideration should be recognized as ________.
  • P & L
  • Goodwill
  • General reserve
  • Capital reserve
Depreciation refers to 
  • Closure of a plant due to lock out
  • Closure of a plant due to labour issues
  • Loss of equipment over time due to wear to tear
  • Destruction of plant in a fire accident
Which of the following asset does not depreciate?
  • Machinery and equipment
  • Motor Vehicles
  • Land
  • Furniture
Depreciation is provided on _________.
  • Current assets
  • Liquid assets
  • Fictitious assets
  • Fixed assets
An asset is never reduced to zero in the _______________.
  • Fixed instalment method.
  • Reducing balance method.
  • Annuity method.
  • Sum of years method.
Depreciation is a charge against _______.
  • Profit
  • Assets
  • Company
  • Books of A/c
Which one of the following depreciation methods is most suitable for a coal mine?
  • Diminishing balance method
  • Depletion method
  • Fixed instalment method
  • Sum of year's digits method
The purpose of depreciation is to _____________.
  • Reduce fixed assets to market value each year
  • Save income tax and wealth tax
  • Reduce fixed assets to the standard value
  • Allocate the cost of fixed asset
_________ cost will still be incurred although a plant is shut down temporarily.
  • Cost of raw material
  • Advertising
  • Depreciation
  • Carriage
If the total charge of depreciation and maintenance is considered as the method which would provide a uniform charge is?
  • Annuity method
  • Straight line method
  • Diminishing balance method
  • Insurance policy method
The reduction in the value of the fixed assets which can arise due to time factor is:
  • Discount
  • Depreciation
  • Reduction
  • None of these
Accounting Standard-6 relating to depreciation is applicable to___________.
  • Forests and plantations
  • Mines
  • Goodwill
  • Land if it has a limited useful life for the enterprise
The amount of depreciation under straight line method vis-vis written down value method, when the rate of depreciation is same, would be:
  • Equal in all years
  • Equal in the first year but higher is subsequent years
  • Equal in the first year but lower in subsequent years
  • Lower in the first year but equal in subsequent years
An asset is purchased for Rs. 50,000 on which depreciation is to be provided annually according to the straight line method. The useful life to the asset is 10 years and the residual value is Rs. 10,The rate of depreciation is?
  • 20%
  • 18%
  • 10%
  • 8%
Which one of the following statements is correct?
  • Depreciation is not the process of valuation of asset-it is a process of allocation of cost of asset to the period of its economic life.
  • If the cost of machinery is more than the book value, then depreciation need not be provided.
  • When the plant and machinery and maintained in good condition, through repairs and renewals, depreciation need not be provided.
  • In the absence of any legal provisions, if the auditor finds that provision made for depreciation is inadequate, then he is not required to refer to it in his report.
Match List-I with List-II and select the correct answer using the codes given the lists.
List-IList-II
I. Amortisation(a) Diminition in the life of the assets due to excessive use
II. Depreciation(b) Exhaustion of natural resource
III. Depletion(c) Expiration of tangible assets
IV. Obsolescence(d) Expiration of intangible assets
(e) Economic deterioration due to improved inventions
  • I-(a), II-(b), III-(c), IV-(d)
  • I-(a), II-(b), III-(d), IV-(e)
  • I-(e), II-(b), III-(c), IV-(d)
  • I-(d), II-(c), III-(b), IV-(e)
The amount of depreciation charged to Profit and Loss Account varies every year under _________.
  • Fixed installment method
  • Annuity method
  • Diminishing balance method
  • Insurance policy method
Accumulated depreciation account is shown in the final accounts:
  • On the liability side of the balance sheet.
  • On the debit side of the profit and loss account.
  • By deducting from the related asset account in the balance sheet.
  • On the credit side of the profit and loss account.
The permanent, continuing and gradual shrinkage in the book value of a fixed assets is called _______.
  • Appreciation
  • Depreciation
  • Reduction
  • Computation
Match List-I with List-II and select the correct answer using the codes given the lists.
List-IList-II
I. Uncertain liability(a) Amortisation
II. Expiry of tangible asset(b) Long-term liability
III. Basis for all valuations in the balance sheet(c) Research and development
IV. Accounting standard-As-$$8$$(d) Estimated obligation
(e) Conservation convention
  • I-(e), II-(a), III-(b), IV-(c)
  • I-(d), II-(c), III-(e), IV-(a)
  • I-(e), II-(c), III-(d), IV-(a)
  • I-(d), II-(a), III-(e), IV-(c)
Depreciation is allocation of _______________ amount.
  • Increase
  • Decrease
  • Valuable
  • Depreciable
Which of the following is/are capitalised along with the purchase price a fixed asset?
I. Import duty
II. Delivery and handling cost
III. Cash discount
IV. Cost of installation
Select the correct answer using the codes given.
  • III only
  • II and III
  • I, II and IV
  • I, II, III and IV
Under which of the following methods of depreciation, amount of depreciation varies every year
  • Written Down Value Method
  • Straight Line Method
  • Amount of depreciation does not vary on year to year basis
  • None of the above
A company has bought patents. Which of the following methods is most suitable for providing depreciation on them?
  • SLM
  • WDV
  • Sum of year digits
  • Any of the above
Under the __________ method of charging depreciation , depreciation is calculated on original cost.
  • Straight line
  • Diminishing balance
  • Annuity
  • Insurance policy
Which of the following Schedule of the Companies Act, $$2013$$ deals with depreciations?
  • Schedule II
  • Schedule V
  • Schedule XIII
  • Schedule X
According to Accounting Standard-6 which of the following is not required to be disclosed in the financial statement?
  • Historical cost of the asset
  • Depreciated value of the asset
  • Accumulated depreciation
  • Total depreciation for the period for each class of asset
Net book value of a fixed asset is its_____________.
  • Historical cost
  • Historical cost less accumulated deprecation
  • Historical cost less gross book value
  • Fair market value
Which of the following assets is usually assumed not to depreciate?
  • Land
  • Building
  • Plant
  • Furniture
Which of the following items are capitalized along with the purchase price of the fixed asset?
  • Import duties
  • Initial delivery and handling costs
  • Trade discounts
  • (A) and (B)
Accounting Standard-6 relating to depreciation is not applicable on ____________.
  • Building
  • Plant and machinery
  • Live stock
  • Patents
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