MCQ Questions for Class 11 Commerce Accountancy Depreciation, Provision And Reserves Quiz 9

The main objective of providing depreciation is __________________.

0%
To calculate true profit
0%
To calculate financial position
0%
To reduce tax burden
0%
To reduce profit

A decrease in value of fixed asset due to age, wear and tear ___________.

0%
Appreciation
0%
Written down value
0%
Depreciation
0%
Accumulated depreciation

__________ has defined depreciation as "a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, effluxion of time or obsolescence through technology and market changes. Depreciation is allocated so as to charge a fair proportion of depreciable amount in each accounting period during the expected useful life of the asset. Depreciation includes amortization of assets whose useful life is predetermined."

0%
The Institute of Chartered Accountants of England
0%
The Institute of Chartered Accountants of India
0%
American Institute of Certified Public Accountants
0%
The Institute of Chartered Accountants of Pakistan

Which of the following is/are the objectives of providing depreciation?

0%
To ascertain the correct profit
0%
To meet the legal requirements
0%
To present true financial position
0%
All of the above

What is the accumulated depreciation?

0%
Sum of all depreciation expenses of a fixed asset
0%
Depreciation expenses
0%
Cost of depletion of assets
0%
Future value of fixed asset

A purchased an old computer costing

$Rs. 10,000$ and incurred

$Rs. 1,000$ on its repair and

$Rs. 500$ on its packing. He sold the computer at

$20$ % margin on selling price. The sales value will be _________.

0%
$Rs. 12,500$
0%
$Rs. 11,000$
0%
$Rs. 14,375$
0%
$Rs. 13,800$

Under which of the following method depreciation is not charged uniformity?

0%
Fixed instalment method
0%
Insurance policy method
0%
Double decline method
0%
All of the above

Which of the following statements is/are false?
(I) The term 'depreciation', 'depletion' and 'amortization' convey the same meaning.
(II) Provision For Depreciation A/c debited when Provision For Depreciation A/c is created.
(III) The main purpose of charging the Profit & Loss A/c with the amount of depreciation is to spread the cost of an asset over its useful life for the purpose of income determination.
The correct option is -

0%
Only (I) of the above
0%
Only (II) of the above
0%
Only (III) of the above
0%
All (I),(II) and (III)

Which of the following is/are the objectives of providing depreciation?

0%
To make provision for receivables
0%
To derive maximum tax benefit for excise duty by taking cenvat credit.
0%
To present true financial position
0%
All of the above

Which of the following is/are not the objectives of providing depreciation?

0%
To create secrete reserve
0%
To derive maximum tax benefit
0%
To ascertain the proper cost of the product
0%
All of the above

The portion of the acquisition cost of the asset, yet to be allocated is known as ___________________.

0%
Written Down Value
0%
Accumulated Value
0%
Realizable Value
0%
Salvage Value

Which of the following is/are cannot be treated a cause for providing depreciation?

0%
Obsolescence
0%
Depreciation is a appropriation of profit
0%
Physical wear and tear resulting from use
0%
All of the above

Under _____ method depreciation is provided as a fixed percentage of the written down value of the asset.

0%
Fixed instalment method.
0%
Annuity method
0%
Reducing balance method
0%
All of the above

Under which of the following method of depreciation charged does not declines?

0%
Fixed instalment method
0%
Sum of year digit method
0%
Double decline method
0%
All of the above

Under which of the following method depreciation charged declines?

0%
Diminishing balance method
0%
Sum of year digit method
0%
Double decline method
0%
All of the above

Which of the following is correct formula for charging depreciation under fixed instalment method?

0%
Depreciation = $\frac{Scrap Value - Original cost}{Life of the asset}$
0%
Depreciation = $\frac{Life of the asset - Scrap Value}{Original cost}$
0%
Depreciation = $\frac{Original Cost - Scrap Value}{Life of the asset}$
0%
Depreciation = $\frac{Scrap Value - Life of the asset}{Original cost}$

Which of the following statement is false?
(I) Depreciation expense shown on a company's income statement must be the same amount as the depreciation expense on the company's income tax return.
(II) The purpose of depreciation is to have the balance sheet report the current value of an asset.
(III) Depreciation expense reflects an allocation of an asset's original cost rather than an allocation based on the economic value that being consumed.
(IV) One company might depreciate a new computer over three years while another company might depreciate the same model computer over five years and both companies are right.
The correct option is _____________________.

0%
(I) & (III)
0%
(II) & (IV)
0%
(I) & (II)
0%
(I) , (II) & (III)

Which of the following is/are advantage of fixed instalment method of charging depreciation?

0%
This method is acceptable to income tax authorities.
0%
The value of the asset can be completely written off, i.e the value can be reduced to zero.
0%
The efficiency and usefulness is more in early years so depreciation amount is also more in early years and goes on diminishing year to year.
0%
All of the above.

Which of the following is/are cannot be treated as advantage of fixed instalment method of charging depreciation?

0%
It is a simple and easy method.
0%
It takes into account the effective utilization of the asset.
0%
This method can be applied where asset gets depreciated because of effluxion of time like furniture, equipments, patents, leasehold etc.
0%
All of the above

Which of the following method is applicable in case of wasting assets, i.e.,mines, quarries, oil well etc.?

0%
Inventory system of depreciation
0%
Machine hour rate
0%
Sum of years digit
0%
Depletion Method

The book value of an asset is defined as -

0%
Cost minus salvage value
0%
Cost minus accumulated depreciation
0%
Cost minus salvage value minus accumulated depreciation.
0%
Estimated fair market value.

A manufacturer owns three machines - the first acquired on

$1.1.2011 for 1,10,000$ , the second on

$1.7.2013$ for Rs

$90,000$ , and on the third on

$1.10.2015$ for Rs

$1,30,000$ . He expects to use each machine for ten years and realize the scrap for

$10,000$ . Using the straight-line method what is his depreciation for the year ended

$31.12.2015$ ?

0%
$33,000$
0%
$21,000$
0%
$30,000$
0%
$12,000$

Z Ltd. purchased a machine on

$1.1.2012$ for Rs

$12,000$ . Installation expenses were Rs

$1,000$ . Residual value after

$5$ years Rs

$500$ . Depreciation is provided under SLM. Department rate is

$10\%$ p.a Annual depreciation=?

0%
$1,700$
0%
$1,300$
0%
$2,100$
0%
$2,500$

Z Ltd. acquired machinery on

$1st$ January

$2011$ at a cost of Rs

$72,000$ and spent Rs.

$8,000$ for its installation. The firm writes off depreciation at

$10\%$ p.a on the original cost every year. The books are closed on

$31st$ December every year. Depreciation for

$1st$ &

$2nd$ year as per fixed instalment method will be Rs.__________

0%
$6,000, 6,000$ $
0%
$8,000, 8,000$ $
0%
$8,000, 7,200$ $
0%
$6,000, 8,000$ $

Which of the following is odd one?

0%
Amortization
0%
Capitalization
0%
Depletion
0%
Depreciation

Original cost = Rs

$12,00,000$ . Salvage value = Rs

$2,00,000$ . Useful Life =

$10$ years. Annual depeciation = ? & rate of depreciation = ?

0%
$Rs1,00,000 & 10\%$
0%
$Rs1,00,000 & 8.33\%$
0%
$Rs1,20,000 & 12\%$
0%
$Rs1,20,000 & 8.33\%$

N.Ltd. purchase Machinery for Rs

$10,00,000$ on

$1.1.2012$ . Installation expenses were Rs

$50,000$ . Life of the asset is

$6$ years at the end of which asset can be sold at Rs

$30,000$ . Annual depreciation under straight line method will be =?

0%
$1,80,000$
0%
$1,66,667$
0%
$1,70,000$
0%
$1,71,667$

Machinery costing Rs

$20,00,000$ was purchased on

$1.4.2012$ . The installation charges amounting Rs

$5,00,000$ were incurred. The depreciation at

$10\%$ p.a. on straight line method for the year ended

$31st$ March,

$2013$ will be ___________________.

0%
$1,50,000$
0%
$2,50,000$
0%
$2,00,000$
0%
$50,000$

A change in accounting policy e.g. change in method of depreciation is justified -

0%
To comply with accounting standard
0%
To ensure more appropriate presentation of the financial statement of the enterprise
0%
To comply with law
0%
All of the above

Original cost = Rs

$88,200$ . Salvage value =

$4,200$ . Useful Life =

$3$ years. Depreciation rate = ?

0%
$33.333\%$
0%
$31.746\%$
0%
$34.921\%$
0%
None of the above

A machine was purchased on 1st January 2013 for Rs 25,000 and is to be depreciated at 30 % p.a. based on reducing balance method. If the company closes books of account on 31st March every year, what would be the net book value of the equipment as at 31st December, 2014?

0%
Rs. $12,250$
0%
Rs. $10,000$
0%
Rs. $17,750$
0%
Rs. $12,545$

Hi-Fi Ltd acquired machinery on 1st January 2012 at a cost of Rs36,000 and spent Rs.4,000 for its installation. The firm writes off depreciation at 10% p.a. on WDV basis. The books are closed on 31st December. Depreciation for 1st& 2nd year will be Rs________ & Rs_______.

0%
$3,600, 3,240$
0%
$4,000, 3,600$
0%
$3,600, 4,000$
0%
$3,240, 2,916$

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 installment method up to 31.3.The rate of depreciation charged up to 31.3.2015 = ?

0%
$10.0\%$
0%
$9.0\%$
0%
$8.5\%$
0%
$7.5\%$

Original Cost = Rs

$1,00,000$ . Life =

$5$ years. Expected salvage value = Rs

$2,000$ . What will be the rate of depreciation p.a?

0%
$20.0\%$
0%
$19.8\%$
0%
$19.6\%$
0%
$19.4\%$

Explanation

Depreciation =

$\frac{1,00,000 - 2,000}{5} = 19,600$ ;
Rate of depreciation =

$\frac{19,600 \times 100}{1,00,000} = 19.6\%$

Depreciable assets which:

0%
Are expected to be used during more than one accounting period
0%
Have a limited useful life
0%
Are held by an enterprise for use in the production or supply of goods and services, for rental to others, or administrative purposes and not for the purpose of sale in the ordinary course of business.
0%
All of above

A Ltd.acquired a machine on

$1st$ January,

$2010$ at a cost of Rs

$14,000$ and spent Rs

$1,000$ on its installation. The firm writes off depreciation at

$10\%$ p.a of the original cost every year. The books are closed on

$31st$ December every year. The books are closed on

$31st$ December every year. After

$3$ years machine sold for Rs

$9,000$ . Profit/Loss on sale = ?

0%
Profit-Rs $1,500$
0%
Loss - Rs $1,500$
0%
Profit - Rs $800$
0%
Loss - Rs $800$

On 1.1.2014, the Plant Account showed a balance of Rs.80,Out of the above, a Plant whose book value was Rs10,000 on that date was sold for Rs6,000 on 1.4.On 1.10.2015, the plant was purchased for Rs20,Depreciation is charged at 10\% p.a. on SLM basis and books of accounts are closed on 31st December each year. Loss on sale of Plant on = ?.

0%
Rs. $2,750$
0%
Rs. $8,750$
0%
Rs. $6,000$
0%
Rs. $9,000$

N.Ltd, purchased machine for Rs 1,00,000 on 1.1.Installation expenses were Rs 10,Life of the asset is 5 years at the end of which asset can be sold at Rs 5,Depreciation rate is 15% on WDV. Depreciation for 4th year = Rs______?______.

0%
$9,212$
0%
$9,673$
0%
$10,594$
0%
$10,133$

Consider the following information:
Rate of depreciation under the written down method =

$20\%$ ; Original cost of the asset = Rs

$1,00,000$ ; Residual value of the asset at the end of useful life = Rs.

$40,960$ .
Estimated useful life of the asset = ?

0%
$4$ years
0%
$5$ years
0%
$6$ years
0%
$7$ year

S.Ltd. acquired a machine on 1st January 2010 at a cost of Rs 1,40,000 and spent Rs 10,000 on its installation. The firm writes off depreciation at 15% on WDV. The books are closed on 31st December every year. After 3 years machine sold for Rs 87,Profit Loss on sale =?

0%
Profit - Rs $1,023$
0%
Loss- $1,023$
0%
Profit - Rs $5,119$
0%
Loss - Rs $5,119$

$1st$ April

$2015$ in Sethi's Ledger, furniture account showed a balance of Rs

$2,00,000$ . On

$1st$ October,

$2015$ Sethi purchased new furniture by paying Rs

$5,000$ and giving old furniture whose book value on

$1st$ April

$2015$ was Rs

$12,000$ to the seller. Sethi provides depreciation on furniture @

$10\%$ p.a on diminishing balance method. The net book value of furniture in Seti's book on

$31.3.2016$ =?

0%
Rs. $1,85,080$
0%
Rs. $1,83,960$
0%
Rs. $1,84,780$
0%
Rs. $2,04,400$

Depreciation accounting is _______________.

0%
A process of valuation of fixed asset
0%
A process of allocation of the cost of fixed asset
0%
A method of providing funds for replacement
0%
A method of comparison

Depreciation in subsequent years (other than the first year) is ___________.

0%
a fall in the Original cost of an asset
0%
a fall in the Book value of an asset
0%
a fall in the market value of an asset
0%
all of the above

A Company purchased plant for Rs.The useful life of the plant is 10 years and the residual value is Rs.The management wants to depreciate it by straight line method. What will be the rate of depreciation?

0%
$8\%$
0%
$9\%$
0%
$10\%$
0%
None of the above

When depreciation is recorded by charging to Provision for Depreciation Account, the asset appears -

0%
At original cost
0%
At original cost / less depreciation
0%
At market value
0%
At realizable value

Which method of depreciation is suggested for coal mines?

0%
Diminishing balance
0%
Fixed instalment method
0%
Sum of year's digits method
0%
Depletion method

The written down value of machine on 31st March 2013 is Rs 72,The machine was purchased on 1st April,Depreciation is charged @ 10 % p.a by diminishing balance method. The cost price of the machine = ?

0%
Rs $1,00,000$
0%
Rs $90,000$
0%
Rs $81,000$
0%
Rs $72,000$

With reference to manufacturing account, which of the following is not true:

0%
Depreciation on Factory Plants Machinery appears
0%
Depreciation on Factory Land & Building appears
0%
Depreciation on Office Land & Building appears
0%
None of these

Which of the following statement is/are NOT correct?

0%
Provision for bad debts appears as a liability on the balance sheet
0%
The provision for bad debts is owed to the proprietor
0%
Bad debts could be less than the provision for bad debts
0%
Bad debts could exceed the provision for bad debts

Depreciation is related to:

0%
Current Assets
0%
Investment
0%
All Fixed Assets
0%
All Fixed Tangible Assets

CBSE Questions for Class 11 Commerce Accountancy Depreciation, Provision And Reserves Quiz 9 - MCQExams.com

Objectives or Need for Providing Depreciation:

Objectives or Need for Providing Depreciation:

Objectives or Need for Providing Depreciation:

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Practice Class 11 Commerce Accountancy Quiz Questions and Answers

CBSE Questions for Class 11 Commerce Accountancy Depreciation, Provision And Reserves Quiz 9 - MCQExams.com

Objectives or Need for Providing Depreciation:

Objectives or Need for Providing Depreciation:

Objectives or Need for Providing Depreciation:

0:0:1

Practice Class 11 Commerce Accountancy Quiz Questions and Answers

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