CBSE Questions for Class 11 Commerce Accountancy Depreciation, Provision And Reserves Quiz 10 - MCQExams.com

Equipment was purchased on $$1st$$ January $$2012$$ for Rs$$25,000$$ and is to be depreciated at $$30\%$$ based on reducing balance method. If the company closes its books of account on $$31st$$ March every year, what would be the net book value of the equipment as at $$31st$$ December $$2013$$?
  • Rs$$12,250$$
  • Rs$$10,000$$
  • Rs$$17,750$$
  • Rs$$12,545$$
M & Co. purchased a machine for a certain sum. The firm has a policy of charging 8 %  depreciation on written down value. The depreciated value of machine after three years is Rs 3,89,Purchase price of machine = ?
  • Rs$$5,00,000$$
  • Rs$$4,60,000$$
  • Rs$$4,23,000$$
  • Rs$$5,52,000$$
Depreciation is shown in _____________.
  • Receipts and Payments Account
  • Income and Expenditure Account
  • Both (A) and (B)
  • Either (A) or (B)
Depreciation amount is the __________________.
  • Difference between historical cost and the market value of an asset
  • Historical cost less estimated salvage value
  • Historical cost less depreciation till date
  • None of these
Useful life of a depreciation asset should be estimated after considering:
  • Expected Physical wear & tear
  • Obsolescence
  • Legal or other limits on the use of the asset
  • Historical cost
  • (A), (B), & (C)
Which of the following statement is true?
  • Depreciation provision is of the discretion of the management
  • Depreciation is a charge against profit
  • Depreciation is provided only when there is profit
  • Depreciation is an appropriation of profit
The factors effecting the amount of depreciation are:
  • Historical Cost, Expected Useful Life & Estimated Residual Value
  • Historical Cost, Expected useful life & Actual Residual Value
  • Historical Cost, Actual Useful Life & Estimated Residual Value
  • Historical Cost, Actual Useful Life & Actual Residual Value
Consider the following data pertaining to M/s. E Ltd. who constructed a cinema house:
Particular                                                                       Rs.
Cost of second hand furniture                                  90,000
Cost of the repainting the furniture                          10,000 
Wages Paid to employees for fixing the furniture      2,000
Fire insurance premium                                              1,000
The amount debited to Furniture Account is ____________.
  • Rs. 90,000
  • Rs. 91,000
  • Rs. 1,00,000
  • Rs. 1,02,000
The main causes of depreciation include:
  • Physical wear & tear
  • Passage of time
  • Changes Economic Development
  • Expiration of Legal Rights
  • All of the above
Useful life of fixed asset is _________.
  • The period over which a depreciable asset expected to be used by the enterprises, or
  • The number of production or similar units expected to be obtained from the use of the asset by the enterprise
  • (A) or (B)
  • None of the above
The objectives of providing depreciation include:
  • To ascertain in true financial performannce
  • To Ascertain true financial position
  • To ascertain true cost of production
  • To comply with legal requirements
  • To accumulate funds for replacement of assets
  • All of above
X Ltd. Purchased a machine on 1st Jan for Rs. 2,40,Installation expenses were Rs. 20,Residual value after 5 years Rs. 10,On 1st July, expenses for repairs were incurred to the extent of Rs. 4,Depreciation rate = 10% Depreciation for 4th year will be:
  • Rs. 26,000
  • Rs. 34,000
  • Rs. 42,000
  • Rs. 50,000
Consider the following information:
I. Rate of depreciation under the written down method= 20%
II. Original cost of the asset = Rs. 2,00,000
III. Residual value of the asset at the end of useful life= Rs. 81,920
Depreciation for 3rd year = 
  • Rs. 40,000
  • Rs. 32,000
  • Rs. 25,600
  • Rs. 20,480
Purchase Price of Machine Rs. 1,50,000, Installation Charges Rs. 50,000, Residual Value Rs. 81,920, Useful life 4 years, the amount of depreciation under WDV Method for the third year will be: 
  • Rs. 40,000
  • Rs. 32,000
  • Rs. 25,600
  • Rs. 20,480
Which method is followed to have a uniform charge for depreciation and repair and maintenance together ?
  • Written Down Value Method
  • Straight Line Method
  • Double Declining Method
  • Sum of Years Digits Method
The balance in the accumulated provision for depreciation account of a company as at the beginning of the year was Rs. 2,00,000 when the original cost of the assets amounted to Rs. 10,00,The company charges 10% depreciation on a straight line basis for all the assets including those which have been either purchased or sold during the year. One such asset costing Rs. 5,00,000 with accumulated depreciation as at the beginning of the year of Rs. 80,00,000 was deposited off during the year.
Depreciation for the year is __________.
  • Rs. 40,000
  • Rs. 50,000
  • Rs. 60,000
  • Rs. 1,00,000
Providing depreciation ensures sufficient cash for asset replacement under-
  • Boom conditions
  • Inflationary condition
  • Non inflationary condition
  • None of the above
Date of purchase 1st July, Purchase Price of Machine Rs. 80,000, Installation Charges Rs. 20,000, Residual Value Rs. 40,960, Usefullife 4 years, Accounting year - financial year. Date when Machine was put to use- 1st Oct. Depreciation under WDV method for the first year will be:
  • Rs. 20,000
  • Rs. 15,000
  • Rs. 10,000
  • None of these
Date of Purchase 1st July, Purchase Price of Machine Rs. 80,000, Installation Charges Rs. 20,Residual Value  Rs. 40,Useful life 4 years, Accounting year - Financial year.
The depreciation under SLM for the first year will be:
  • Rs. 22,500
  • Rs. 14,760
  • Rs. 11,070
  • None of these
The balance of Glass & Cutlery A/c on 01.01.2014 is Rs. 28,Glass & Cutlery purchased during the year were Rs. 16,Depreciation is to be charged on the above as follows-
-1/5th of its value is to be written off in the year of purchase, and 
-2/5th in each of the next 2 years. 
Of the stock of Glass & Cutlery as on 01.01.2014, 1/2 was one year old and 1/2 was 2 years old.
Purchase are made on 1st January.
Closing Balance of Glass & Cutley A/c is _____.
  • Rs. 28,000
  • Rs. 28,500
  • Rs. 26,800
  • Rs. 28,600
Date of Purchase - 1st July, Purchase Price of Machine Rs. 80,000, Installation Charges Rs. 20,000, Residual Value Rs. 40,960, Useful life 4 years, Accounting year -Financial year. Date when Machine was put to use- 1st Oct.
The depreciation under SLM for the first year will be:-
  • Rs. 12,500
  • Rs. 11, 070
  • Rs. 7,380
  • None of these
X Ltd. purchased a machine for Rs. 1,20,000 and incurred Rs. 40,000 towards freight, insurance, carriage inwards and installation charges. It was estimated that its life is 4 years during which a sum of Rs. 60,000 is likely to be spent on its repairs maintenance beginning from the 2nd year. At the end of its useful life, the scrap value will be Rs. 20,Actual repairs were as under:
Year I - Rs. Nil, Year - II Rs. 10,000, Year - III Rs. 20,000, Year - IV Rs. 30,000
At the end of useful life, the realised scrap value of the machine was Rs. 16,000 only. 
The closing balance of Provision for Depreciation and Repairs Account at the Year II will be:
  • Rs. 50,000
  • Rs. 1,00,000
  • Rs. 40,000
  • Rs. 90,000
CAS Ltd. imported a machine on 01.07.2013 for Rs. 1,28,000, paid customs duty and freight Rs. 64,000 and incurred erection charges Rs. 48,Another local machinery costing Rs. 80,000 was purchased on 01.01.On 1st July 2015, a portion of the imported machinery (value one-third) got out of order and was sold for Rs. 27,Another machinery was purchased to replace the same for Rs. 40,Depreciation is to be calculated at 20%p.a.
 The loss on sale of machine and  Closing Balance of Machinery Account on 31.12.2015 will be
  • Rs. 40,320 and Rs. 2,64,000
  • Rs. 40,320 and Rs.3,92,000
  • Rs. 20,160 and Rs. 1,64,000
  • Rs. 39,200 and Rs. 3,92,000
On 1 April 2012, X Ltd. purchased a machinery for Rs. 12,00,On 1 Oct. 2014, a part of the machinery purchased on 1 April 2012 for Rs. 80,000 was sold for Rs. 45,000 and a new machinery at a cost of Rs. 80,000 was purchased and installed on the same date. The company has adopted the method of providing 10% p.a. depreciation on the written down value basis. The closing balance of 'Provision for Depreciation Accounts' as at 31.03.2015 will be: 
  • Rs. 1,20,000
  • Rs. 2,28,000
  • Rs. 3,07,520
  • Rs. 3,48,000
Date of Purchase of Machine 1.4.2012, cost: Rs. 12,00,000, Rate of Depreciation: 10% p.a. on Staright Line Basis. The closing balance of Provision for Depreciation Account as at 31.3.2015 will be: 
  • Rs. 1,20,000
  • Rs. 2,28,000
  • Rs. 3.25,200
  • Rs. 3,60,000
In which of the following methods, is the cost of the asset written off in equal proportion during its economic life?
  • Straight line method
  • Written down value method
  • Units-of-production method
  • Sum-of-the years'-digit method
Which of the following is correct?
  • Depreciation is not the process of valuation of assets- it is the process of allocation of costs to the period of its economic life
  • If cost of machinery is more than book value there is no need of providing depreciation
  • If plant and machinery are in good condition, through repairs etc., there is no need to provide depreciation
  • All the above
A new machine costing Rs. 2 lakh was purchased by a company to manufacture a special product. Its useful life is estimated to be 5 years and scrap value at Rs. 20,The production plan for the next 5 years are as follows:
Year I     5,000   units,
Year II    10,000  units,
Year III    12,000 units,
Year IV   20,000 units,
Year V    25,000 units.
The depreciation for the 4 years under the units-of-production method will be_______.
  • Rs. 12,500
  • Rs. 25,000
  • Rs. 30,000
  • Rs. 50,000
Date of Purchase of Machine 1.4.2012, Cost: Rs. 12,00,000, Rate of Depreciation: 10% p.a. Straight Line Basis. On 1.10.2014, a new machinery was purchased for Rs. 80,The closing balance of Provision for Depreciation Account as at 31.3.2015 will be:
  • Rs. 1,20,000
  • Rs. 2,28,000
  • Rs. 3,25,200
  • Rs. 3,64,000
On 1 st January 2011, Tushar Ltd. purchased a machine for Rs. 20,000 and written back depreciation @ 10% p.a. At the end of 2014, the company decided to change the method of Straight Line Method retrospectively, the rate of depreciation remaining the same.
On account of changed method of depreciation-
  • Short Depreciation to be written back Rs. 580
  • Excess Depreciation to be written back Rs.580
  • Excess Depreciation to be written back Rs. 290
  • Short Depreciation to be written back Rs. 1160
In which of the following methods, the cost of the asset is not spread over in equal proportion during its useful economic life?
  • Sum of years Digits Method
  • Written down value method
  • Units of production method
  • All of the above
Date of Purchase of Machine 1.4.2012, cost: Rs. 12,00,000, Rate of Depreciation: 10% p.a Written down Value Basis. On 1.10.2014, a part of machinery purchased on 1.4.for Rs. 80,000 was sold for Rs. 45,The closing balance of Provision for Depreciation Accounts as at 31.3.2015 will be: 
  • Rs. 1,20,000
  • Rs. 2,28,000
  • Rs. 3,03,520
  • Rs. 3,44,000
According to the Income Tax Act, which method of charging depreciation is provided?
  • Reducing Balance Method
  • Sinking Fund
  • Annuity Method
  • Straight Line Method
Which Reserve has debit balance?
  • General Reserve
  • Contingency Reserve
  • Joint Life Policy Reserve
  • Investment Fluctuation Reserve
  • Reserve for Discount on Creditors
Provision for Discount on Debtors is_______________.
  • Debited to Sundry Debtors Account
  • Credited to Sundry Debtors Account
  • Debited to Bad Debts Account
  • Debited to Profit & Loss Account
The W.D.V of an asset after three years of depreciation on the reducing balance method @ 10% pa. is its.36,What was its original value?
  • Rs.40,000
  • Rs. 50,000
  • Rs.45,000
  • Rs. 70,250
On $$1^{st}$$ January, 2006 A Ltd purchased a machine for Rs 50,000 and spent Rs 4,000 on its carriage and Rs. 2000 on its installation. Its useful life is 10 years and scrap is Rs.Depreciation for the year under fixed installment method will be:
  • Rs. 4,600
  • Rs. 5,000
  • Rs. 4,800
  • Rs. 4,500
The main objective of providing depreciation is to ______________.
  • Reduce tax burden
  • Provide funds for replacement of fixed asset
  • Show true financial position in the balance sheet
  • Comply with legal requirements
Provision is________________________.
  • An unknown liability but its amount and due date are determinate.
  • An unknown liability and its amount and due date are determinate.
  • A known liability and its amount and due date are determinate.
  • A known liability but its amount and due date are indeterminate.
Amortization refers to writing off:
  • Depleting assets
  • Wasting assets
  • Intangible assets
  • Fictitious assets
Depreciation is to be calculated from the date of _____________________.
  • Asset put to use
  • Purchase order of asset
  • Receipt of asset at business premise
  • Invoice of assets.
Depreciation is the process of:
  • Asset Valuation
  • Verification of assets
  • Allocation of cost of assets to the period of its life
  • Decreasing the value of asset
A machine was bought at a cost of Rs. 5 lacs on 1.1.02 During its life of 10 years it will be depreciated on SLM basis. On 31.12.08 the machine was sold for Rs. 50,Find out the profit/loss?
  • Loss of Rs. 1,50,000
  • Loss of Rs. 100000
  • Profit of Rs.1,00,000
  • Profit of Rs. 1,50,000
Which of the following is Depleted?
  • Furniture
  • Goodwill
  • Machinery
  • Coal Mines
Which method of depreciation is effective if repairs and maintenance cost of an asset increases as it grows old _________________.
  • Straight line method
  • Sinking Fund
  • Annuity
  • Reducing Balance
A machinery is depreciated by Rs. 2000 every year. Which method is being used to calculate depreciation?
  • Written Down value method
  • Straight line method
  • Sum of years Digit method
  • None of these
Cost of machinery = Rs.2,52,000
Salvage value = Rs.12,000
Useful life = 6 years
Annual depreciation under straight line method will be: 
  • Rs. 42,000
  • Rs. 40,000
  • Rs. 15,000
  • Rs. 28,000
In case of reducing balance method of charging depreciation is charged on the:
  • Original Cost
  • Original Cost less Scrap value
  • Market Value
  • Written Down value
Depreciation, as the term is used in accounting, means ___________.
  • Physical deterioration of a fixed asset
  • Decline in the market value of an asset
  • Allocation of the cost of fixed asset over its useful life
  • A business expense for acquiring asset
A machine was purchased on 1st April 2007 for Rs 5,00,000 and 1st October 2007 for Rs 2,00,Calculate depreciation @ 20% p.a. on written down value method for the year ending 31st March 2008.
  • Rs. 1,00,000
  • Rs. 1,40,000
  • Rs. 40,000
  • Rs. 1,20,000
0:0:1


Answered Not Answered Not Visited Correct : 0 Incorrect : 0

Practice Class 11 Commerce Accountancy Quiz Questions and Answers