Depreciation Provisions and Reserves Test

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Depreciation Provisions and Reserves Test - 1

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Weekly Quiz Competition

Question 1
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When an asset is disposed off the procedure will be recorded in a separate account called :

A
Profit account

B
Reserves account

C
Asset disposal account

D
Sales account

Solution

Explanation:

When an asset is sold then the proceedings will be recorded in a separate account called asset disposal account. It enables to calculate the profit earned or loss incurred in the sale transactions.
Question 2
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The term _____ is generally used for the depreciation of natural resources

A
Amortization

B
Depletion

C
Disposal value

D
Appreciation

Solution

Explanation:

Depletion is an accounting techniqe used for allocation of value of natural resources.
Question 3
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An increase in the value of fixed asset is referred to as:

A
Reserve depreciation

B
Market capitalization

C
Appreciation

D
Purchase of Asset

Solution

Explanation:

Appreciation is an increase in the value of an asset over time. The increase can occur for a number of reasons, including increased demand or weakening supply, or as a result of changes in inflation or interest rates. This is the opposite of depreciation, which is a decrease over time.
Question 4
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In depreciation calculation, the useful life of a fixed asset is:

A
A predetermined figure for all fixed assets

B
None of these

C
An estimate

D
A certain figure

Solution

Explanation:

The value is depreciated in equal amounts over the course of the estimated useful life.
Question 5
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Cost of a fixed asset – Accumulated depreciation expenses of the fixed asset=?

A
Market value of fixed asset

B
Recoverable amount of a fixed asset

C
Book value of fixed asset

D
Historical cost of a fixed asset

Solution

Explanation:

Book value of an asset is a value at which asset is recorded in books. It is also known as written down value.
Question 6
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What is the rate of charging depreciation under diminishing method?

A
10% p.a.

B
12% p.a.

C
Not fixed

D
15% p.a.

Solution

Explanation:

because every time depreciation is calculated on written down value of an asset.
Question 7
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An alternative term used for accumulated depreciation expenses?

A
Targeted depreciation

B
Provision for depreciation

C
Cumulative depreciation

D
Depletion

Solution

Explanation:

It is used along with the fixed asset in order to report the net asset value.
Question 8
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What is depreciation?

A
Portion of a fixed assets cost consumed during the current accounting

B
Cost of fixed asset’s repair

C
Cost of using a fixed asset

D
The value of asset

Solution

Explanation:

It is reduction in the value of an asset due to wear and tear.
Question 9
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Which of the following is not a type of reserve

A
Provision for bad debt

B
Retained earnings

C
Workmen compensation fund

D
General reserve;

Solution

Explanation:

Provision for Bad Debts is an asset account with a credit balance. It is used along with the Accounts Receivable(Debtors) in order to report the net realizable value of the accounts receivable.
Question 10
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Depreciation charged under diminishing method

A
Increase in one year and decrease another year

B
Same every year

C
Increase every year

D
Decrease every year

Solution

Explanation:

Under diminishing method, every time depreciation is calculated on written down value of an asset.

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Re-Attempt Weekly Quiz Competition

Depreciation Provisions and Reserves Test - 1

Result

Depreciation Provisions and Reserves Test - 1

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SHARING IS CARING

Question 1

Profit account

Reserves account

Asset disposal account

Sales account

Solution

Question 2

Amortization

Depletion

Disposal value

Appreciation

Solution

Question 3

Reserve depreciation

Market capitalization

Appreciation

Purchase of Asset

Solution

Question 4

A predetermined figure for all fixed assets

None of these

An estimate

A certain figure

Solution

Question 5

Market value of fixed asset

Recoverable amount of a fixed asset

Book value of fixed asset

Historical cost of a fixed asset

Solution

Question 6

10% p.a.

12% p.a.

Not fixed

15% p.a.

Solution

Question 7

Targeted depreciation

Provision for depreciation

Cumulative depreciation

Depletion

Solution

Question 8

Portion of a fixed assets cost consumed during the current accounting

Cost of fixed asset’s repair

Cost of using a fixed asset

The value of asset

Solution

Question 9

Provision for bad debt

Retained earnings

Workmen compensation fund

General reserve;

Solution

Question 10

Increase in one year and decrease another year

Same every year

Increase every year

Decrease every year

Solution

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