Depreciation Provisions and Reserves Test

Result

Depreciation Provisions and Reserves Test - 18

Score
-
out of -
Rank
-
out of -

TIME Taken - -

SHARING IS CARING

If our Website helped you a little, then kindly spread our voice using Social Networks. Spread our word to your readers, friends, teachers, students & all those close ones who deserve to know what you know now.

Weekly Quiz Competition

Question 1
1 / -0

In the provision method of depreciation the asset always appears at:

A
Cost price

B
Market Price

C
Scrap Value

D
None of the above

Solution

Under provision for depreciation method of recording depreciation, depreciation is credited to the provision for depreciation account and as a result, the respective asset accout appears at its original cost.
Question 2
1 / -0

The amount of depreciation charged on a machinery will be debited to:

A
Machinery account

B
Depreciation account

C
Cash account

D
Repair account

Solution

Depreciation is the permanent and continuous decrease in the book value of a depreciable fixed asset due to use, effluxion of time, obsolescence, expiration of legal rights or any other cause.
Journal entry for charging depreciation is :
Depreciation A/c Dr.
To Asset/ Machinery A/c
Question 3
1 / -0

When a part of the asset is sold and provision for depreciation account exists, which new account is formed?

A
Depreciation account

B
Use of Asset Disposal Account

C
Provision for depreciation account

D
Asset account

Solution

Option B is the correct one.

A disposal account is a gain or loss account that appears in the income statement, and in which is recorded the difference between the disposal proceeds and the net carrying amount of the fixed asset being disposed of.
Question 4
1 / -0

Give journal entries:
Depreciation debited to profit and loss account

A
Machine A/c Dr.

To Bank A/c

B
Profit and Loss A/c Dr.

To Depreciation A/c

C
Depreciation A/c Dr.

To Profit and Loss A/c

D
Depreciation A/c Dr

To Machine A/c

Solution

As per the golden rules of accounting for nominal account all expenses and losses are debited and all income and gains are credited and for rael account, what comes in debit and what goes out is credit.
In the light of above rule, journal entry for providing depreciation and charging it to profit and losss A/c is -
1. Depreciation A/c Dr.
To Asset A/c
(Being depreciation chargedd to asset)
2. Profit and loss A/c Dr.
To Depreciation A/c
(Being depreciation expense transferred to P&L A/c)
Question 5
1 / -0

What is debited in asset disposal account?

A
Market value of asset

B
Accumulated depreciation

C
Original cost of asset being sold

D
Loss on sale

Solution

Asset disposal account is prepaed to ascertain profit or loss, when the asset is sold or dicarded. Asset disposal account is debited with original cost of asset disposed off.
Question 6
1 / -0

Depreciation acts as an __________.

A
Replacement cost

B
Repair cost

C
Rental cost

D
None

Solution

Depreciation is a non-cash expense it is charged against profit but the actual amount for its proportion revolves inside the business. Hence total depreciation over a period of time will reflect a good amount of cost for the replacement of the asset.
Question 7
1 / -0

Reserve arising from capital receipts are known as_____.

A
Capital reserve

B
Reserve fund

C
Secret reserve

D
General reserve

Solution

The term 'Reserves' refers to the profits reatined in the business not having any of the attributes of a 'provision' If however, the provision exceeds the amount which is required to meet the loss or liabilty, the excess is to be treated as reserve. In other words, Reserves means accumulated or undistributed profits.
Basically, there are two types of reserves viz. Revenue Reserves and Capital Reserves.
Revenue reserves are those reserves which are created out of profits available for distribtion by way of dividend .
Capital reserves are those reserves which are not created out of operating profit but they arise out of capital receipts.
Question 8
1 / -0

Other name of straight line basis of depreciation is ___________________.

A
Reducing depreciation

B
Diminishing balance method

C
Written down value method

D
None of the above

Solution

Straight line method of depreciation - Under straight line method, a fixed and equal amount of depreciation, calculated at a fixed percentage on the original cost of a fixed depreciable asset is written off during each accounting period over the expected useful life of the asset.
Straight line method of depreciation can also be called as fixed installment method of depreciation.
Question 9
1 / -0

Depreciation helps to show assets at their __________.

A
Book value

B
Face value

C
Nominal value

D
Par value

Solution

Depreciation is a reduction in the value of the asset. Hence the fair book value is reflected after depreciation is deducted from its cost.
Question 10
1 / -0

What is credited in asset disposal account?

A
Accunulated depreciation

B
Original cost of the asset being sold

C
Sale proceeds of the assets disposed off

D
Both (a) and (c)

Solution

Asset disposal account is prepaed to ascertain profit or loss, when the asset is sold or dicarded. Asset disposal account is credited with :
1. Accumulated depreciation
2. Sale proceeds of the asset disposed off.

User

Question Analysis

Correct -
Wrong -
Skipped -

My Perfomance

Score
-
out of -
Rank
-
out of -

Re-Attempt Weekly Quiz Competition

Depreciation Provisions and Reserves Test - 18

Result

Depreciation Provisions and Reserves Test - 18

Score

-

Rank

-

SHARING IS CARING

Question 1

Cost price

Market Price

Scrap Value

None of the above

Solution

Question 2

Machinery account

Depreciation account

Cash account

Repair account

Solution

Question 3

Depreciation account

Use of Asset Disposal Account

Provision for depreciation account

Asset account

Solution

Question 4

Machine A/c Dr. To Bank A/c

Profit and Loss A/c Dr. To Depreciation A/c

Depreciation A/c Dr. To Profit and Loss A/c

Depreciation A/c Dr To Machine A/c

Solution

Question 5

Market value of asset

Accumulated depreciation

Original cost of asset being sold

Loss on sale

Solution

Question 6

Replacement cost

Repair cost

Rental cost

None

Solution

Question 7

Capital reserve

Reserve fund

Secret reserve

General reserve

Solution

Question 8

Reducing depreciation

Diminishing balance method

Written down value method

None of the above

Solution

Question 9

Book value

Face value

Nominal value

Par value

Solution

Question 10

Accunulated depreciation

Original cost of the asset being sold

Sale proceeds of the assets disposed off

Both (a) and (c)

Solution

User

Question Analysis

My Perfomance

Score

-

Rank

-

Results Announcement on: coming Monday

Stay Tuned: We’ll update you on your result via email or SMS.

Machine A/c Dr.

To Bank A/c

Profit and Loss A/c Dr.

To Depreciation A/c

Depreciation A/c Dr.

To Profit and Loss A/c

Depreciation A/c Dr

To Machine A/c