Depreciation Provisions and Reserves Test

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Depreciation Provisions and Reserves Test - 2

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Weekly Quiz Competition

Question 1
1 / -0

Every fixed asset loses its value due to wear and tear. This decline in the value of asset is known as

A
Depreciation

B
Provisions

C
Devaluation

D
Amortization

Solution

Depreciation is reduction in the value of an asset over time due to its use or aging
Question 2
1 / -0

Following are the causes of Depreciation except

A
Obsolescence

B
normal factors

C
Expiration of legal rights.

D
Wear and tear due to use or passage of time.

Solution

It does not make clear which are the factors which cause reduction in the value of assets. Generally wear and tear, obsolescence, emergence of new technology , expiration of legal rights etc are the causes of depreciation.
Question 3
1 / -0

The term depletion is used for :

A
Fixed asset

B
Natural resources

C
Intangible assets

D
Liabilities

Solution

Depreciation is a means of allocating the cost of a material asset over its useful life, and depletion is used to allocate the cost of extracting natural resources
Question 4
1 / -0

Under straight line method depreciation is calculated on _____value of asset

A
Written down

B
Cost less scrap

C
Market

D
Original

Solution

Under Straight line method, depreciation is calculated by dividing the difference between an asset's cost and its expected salvage value by the number of years it is expected to be used.
Question 5
1 / -0

Depreciation charged under diminishing method

A
Increase every year

B
Decrease every year

C
Same every year

D
Increase in one year and decrease another year

Solution

Under diminishing method, every time depreciation is calculated on written down value of an asset.
Question 6
1 / -0

Which of the following is not a type of reserve

A
General reserve;

B
Workmen compensation fund

C
Retained earnings

D
Provision for bad debt

Solution

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 7
1 / -0

What is depreciation?

A
Cost of using a fixed asset

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

C
The value of asset

D
Cost of fixed asset’s repair

Solution

It is reduction in the value of an asset due to wear and tear.
Question 8
1 / -0

An alternative term used for accumulated depreciation expenses?

A
Depletion

B
Targeted depreciation

C
Cumulative depreciation

D
Provision for depreciation

Solution

It is used along with the fixed asset in order to report the net asset value.
Question 9
1 / -0

In depreciation calculation, the useful life of a fixed asset is:

A
A predetermined figure for all fixed assets

B
An estimate

C
A certain figure

D
None of these

Solution

The value is depreciated in equal amounts over the course of the estimated useful life.
Question 10
1 / -0

What is the rate of charging depreciation under diminishing method?

A
12% p.a.

B
10% p.a.

C
15% p.a.

D
Not fixed

Solution

because 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 - 2

Result

Depreciation Provisions and Reserves Test - 2

Score

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Rank

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SHARING IS CARING

Question 1

Depreciation

Provisions

Devaluation

Amortization

Solution

Question 2

Obsolescence

normal factors

Expiration of legal rights.

Wear and tear due to use or passage of time.

Solution

Question 3

Fixed asset

Natural resources

Intangible assets

Liabilities

Solution

Question 4

Written down

Cost less scrap

Market

Original

Solution

Question 5

Increase every year

Decrease every year

Same every year

Increase in one year and decrease another year

Solution

Question 6

General reserve;

Workmen compensation fund

Retained earnings

Provision for bad debt

Solution

Question 7

Cost of using a fixed asset

Portion of a fixed assets cost consumed during the current accounting

The value of asset

Cost of fixed asset’s repair

Solution

Question 8

Depletion

Targeted depreciation

Cumulative depreciation

Provision for depreciation

Solution

Question 9

A predetermined figure for all fixed assets

An estimate

A certain figure

None of these

Solution

Question 10

12% p.a.

10% p.a.

15% p.a.

Not fixed

Solution

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