CBSE Questions for Class 11 Commerce Accountancy Depreciation, Provision And Reserves Quiz 4 - MCQExams.com

_________ is not a method of depreciation.
  • Straight line method
  • Replacement method
  • Reducing balance
  • Revaluation
Under ________ method, depreciation is calculated on written down value.
  • Fixed Instalment
  • Reducing Balance
  • Revaluation
  • Depletion
Under ___________ system, the amount of depreciation remains constant every year.
  • Fixed Instalment
  • Reducing Balance
  • Insurance Policy
  • Annuity
The amount realised at the end of working life of an asset ___________.
  • Residual value
  • Market price
  • Original cost
  • Written down value
Reserves arising from capital receipts are known as _________.
  • Capital Reserves
  • Reserve Fund
  • Secret Reserve
  • General Reserve
Gradual and permanent decrease in the value of an asset is known as _________.
  • Loss
  • Profit
  • Depreciation
  • Scrap
The amount of depreciation goes on decreasing in every year under the _________ method.
  • Fixed Instalment
  • Straight line
  • Revaluation
  • Written down value
$$Depreciation = \dfrac {\text {Cost of Asset less Scrap Value}}{\text {Estimated Working  ____________ of Asset}}$$.
  • Life 
  • Hours
  • Days
  • Months
Depreciation arises because of _____________.
  • wear and tear
  • inflation
  • fall in the value of asset
  • profit
Depreciation is a non-cash expenses.
  • True
  • False
The money value which is obtained after selling an asset is called __________.
  • Scrap value
  • Sales
  • Cost of sales
  • Purchase price
Capital Reserves are not freely distributed as profits.
  • True
  • False
Depreciation is the _________ in the value of fixed assets due to its wear and tear.
  • Increase
  • Expansion
  • Addition
  • Reduction
Depreciation is a process of ___________.
  • valuation of fixed assets
  • spreading of cost of a fixed asset over its working life
  • provision of fund for replacement of the asset
  • all the three
Profit can not be calculated properly unless depreciation is provided.
  • True
  • False
Under the __________ system of depreciation, the amount of depreciation does not change from year to year.
  • Fixed Instalment
  • Reducing Balance
  • Depletion
  • Machine Hour Rate
Depreciation increase the value of asset.
  • True
  • False
Under the written down value method depreciation is calculated on the original cost of an asset.
  • True
  • False
Depreciation is the process of valuation of asset.
  • True
  • False
Depreciation accounting is a process of ___________.
  • asset valuation
  • allocation of market value of fixed asset over its useful life
  • allocation of depreciation cost of tangible fixed assets over its useful life
  • allocation of depreciable cost of wasting assets over its useful life
Land is not a depreciable asset because __________.
  • its value always increases
  • there in no maintenance cost of land
  • life of the land is unlimited
  • land cannot depreciate
Rights or economic benefits, such as franchises, patents, trademarks, copyrights, and goodwill that are not physical in nature are called _________.
  • long lived assets
  • intangible assets
  • wasting assets
  • depleting assets
To be classified as a depreciable asset the useful life should be ___________.
  • More than one year
  • At least five year
  • More than $$10$$ yrs
  • Indefinite
The features of a depreciable asset includes _______________.
  • limited useful life
  • expected to be used for more than one accounting period
  • held for use in production of goods and services
  • all the three
Resources that are held for an extended time, such as land, buildings equipment, natural resources and patents are called __________.
  • Long lived assets/Fixed Assets
  • Intangible assets
  • Wasting assets
  • Depleting assets
The estimated value of depreciable assets after useful life is called __________.
  • actual value
  • replacement value
  • disposal value
  • current value
The number of years an asset is expected to be useful before it wears out is called its ___________.
  • life expectancy
  • estimated useful life
  • estimated physical life
  • projected life
Assets subject to depreciation are called _____________.
  • fixed assets
  • depreciable assets
  • depleting assets
  • consumable resources
Total depreciation over an asset's useful life is equal to ___________.
  • historical cost
  • cost less salvage value
  • replacement value less scrap value
  • discounted value less scrap value
Allocating the cost of a fixed asset over its useful life is called __________.
  • amortization
  • depreciation
  • obsolescence
  • disposal
Which of the following is not one of the objectives of providing depreciation?
  • To calculate proper profit and loss
  • To provide fund for replacement of the assets
  • To show asset at its reasonable value
  • To evade tax
Salvage value means ____________.
  • Discounted estimated scrap value
  • Current selling price
  • Historical cost less depreciation
  • Estimated disposal value
___________ is a non-cash expenses.
  • Depreciation
  • Patent right
  • Copyright
  • Royalty
________ is the amount received from the disposal of the long lived assets at the end of its useful life.
  • Historical cost
  • Residual value
  • Depreciable value
  • None of the above
_____________ is/are subject to depletion rather than depreciation.
  • Mines
  • Quarries
  • Oil reserves
  • All the three
Depreciation accounting follow ___________ principle.
  • matching cost
  • historical cost method
  • revenue recognizing
  • going concern concept
In accounting record, fixed assets are recorded at __________.
  • Historical cost
  • Normated cost
  • Replacement cost
  • Salvage value
The term "__________" is used for the process of measuring and recording the exhaustion of natural resources.
  • Depreciation
  • Depletion
  • Amortization
  • Obsolescence
The part of the depreciable cost of an asset which is yet to be written off is known as ____________.
  • Residual Value
  • Written Down Value
  • Closing Value
  • None of the Above
____________ is one of the objective of providing depreciation.
  • Ascertainment of true cost of production
  • Sustain financial liquidity of the business
  • Abatement of tax liability
  • Check outflow of funds
The annual depreciation charge is debited to ___________.
  • Concerned Assets
  • Gross Block a/c
  • Depreciation a/c
  • Profit and Loss a/c
___________ method is normally recommended for amortization of intangible assets.
  • SYD
  • SLM
  • WDV
  • DDB
Under diminishing balance method, annual depreciation ___________.
  • Increases every year
  • Decreases every year
  • Is constant every year
  • None of the above
Book value of an asset is obtained by ___________.
  • deducting total depreciation from total acquisition cost
  • deducting current depreciation from total acquisition cost
  • dividing total acquisition cost by estimated useful-life
  • deducting total depreciation and scrap value from total acquisition cost
Non-charging of depreciation will result in ____________.
  • Non-disclosure of true and fair view of the Financial position
  • Over valuation of assets
  • Over statement of profit
  • All the three
A Principal objection to SLM of depreciation is that it ___________.
  • provides for declining productivity of an asset
  • ignores variations in the rate of assets use
  • tends to result in a constant rate of return on a diminishing investment base
  • ives smaller periodic write offs than decreasing charge method
____________ is a method that spreads the depreciable value evenly over the useful life of an asset.
  • SLM
  • DDB
  • WDV
  • None of the above
An asset was shown in the Balance sheet during the last three years at $$Rs. 50000$$, $$Rs.45000$$ and $$Rs.40000$$, the depreciation for $$4th$$ year will be ___________.
  • $$Rs. 4,000$$
  • $$Rs. 5,000$$
  • $$Rs. 4,500$$
  • $$Rs. 3,980$$
____________ method has smallest depreciation in the first year.
  • Double declining
  • SLM
  • Sum of digits
  • Reducing
In the case of assets used for generation and distribution of power, the Income-tax Act  prescribe which of the following method of depreciation.?
  • Sum of digits method
  • Straight line method
  • Annuity method
  • Depletion method
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