Depreciation Provisions and Reserves Test

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Depreciation Provisions and Reserves Test - 26

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Question 1
1 / -0

Assets subject to depreciation are called _____________.

A
fixed assets

B
depreciable assets

C
depleting assets

D
consumable resources

Solution

All those assets on which depreciation is charged by the company are known as depreciable assets.
Question 2
1 / -0

____________ does not suffer depreciation.

A
Plant and Machinery

B
Building

C
Land

D
Mineral Mines

Solution

Land is not depreciated because land is assumed to have an unlimited useful life. Other long-lived assets such as land improvements, building, furnishing, equipment, etc. have limited useful lives. Therefore, the costs of those assets must be allocated to those limited accounting periods.
Question 3
1 / -0

Total depreciation over an asset's useful life is equal to ___________.

A
historical cost

B
cost less salvage value

C
replacement value less scrap value

D
discounted value less scrap value

Solution

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life. The formula to calculate depreciation is (Total cost of asset- Salvage value)/ Useful life of the asset. Hence, total depreciation over useful life equal to cost less salvage value.
Question 4
1 / -0

Which of the following is not one of the objectives of providing depreciation?

A
To calculate proper profit and loss

B
To provide fund for replacement of the assets

C
To show asset at its reasonable value

D
To evade tax

Solution

Depreciation is an accounting method of allocating the cost of a tangible assets over its useful life. The objective of providing depreciation are as follows:
1. For the replacement of assets.
2. For the determination of true profit and loss
3. For the presentation of assets in the balance sheet at their proper value.
4. For the determination of correct cost of production.
Question 5
1 / -0

Allocating the cost of a fixed asset over its useful life is called __________.

A
amortization

B
depreciation

C
obsolescence

D
disposal

Solution

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life. Principle factor in measurement of depreciation are total cost of asset, useful life of the asset, residual value of the asset. In other words a reduction in the value of asset over time, due to particular to wear and tear.
Question 6
1 / -0

_____________ is/are subject to depletion rather than depreciation.

A
Mines

B
Quarries

C
Oil reserves

D
All the three

Solution

Depletion is an accounting technique used to allocate the cost of extracting natural resources such as mines, quarries, oil reserves, timber etc.
Question 7
1 / -0

Depreciation accounting follow ___________ principle.

A
matching cost

B
historical cost method

C
revenue recognizing

D
going concern concept

Solution

The matching principle allows an asset to be distributed and matched over the course of its useful life in order to balance the cost over a given period. Depreciation ensures that the cost of fixed assets is not charged to its profit and loss account at once but is 'matched' against economic benefits (revenue or cost savings) earned from the assets use over several accounting periods.
Question 8
1 / -0

___________ is a non-cash expenses.

A
Depreciation

B
Patent right

C
Copyright

D
Royalty

Solution

A non-cash expense is an expenses that is reported on the income statement of the current accounting period, but there was no related cash payment during the period. A common example of a non-cash expense is depreciation.
Question 9
1 / -0

________ is the amount received from the disposal of the long lived assets at the end of its useful life.

A
Historical cost

B
Residual value

C
Depreciable value

D
None of the above

Solution

Salvage value is sometimes referred to as disposal value, residual value, terminal value, or scrap value. The estimated salvage value is deducted from the cost of the assets in order to determine the total amount of depreciation expenses that will be reported during the assets useful life. The price at which a fixed asset is expected to be sold at the end of its useful life is called as disposal value.
Question 10
1 / -0

Salvage value means ____________.

A
Discounted estimated scrap value

B
Current selling price

C
Historical cost less depreciation

D
Estimated disposal value

Solution

The price at which a fixed assets is expected to be sold at the end of its useful life is called as disposal value. Salvage value is sometimes referred to as disposal value, terminal value, or scrap value.

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Re-Attempt Weekly Quiz Competition

Depreciation Provisions and Reserves Test - 26

Result

Depreciation Provisions and Reserves Test - 26

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Rank

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SHARING IS CARING

Question 1

fixed assets

depreciable assets

depleting assets

consumable resources

Solution

Question 2

Plant and Machinery

Building

Land

Mineral Mines

Solution

Question 3

historical cost

cost less salvage value

replacement value less scrap value

discounted value less scrap value

Solution

Question 4

To calculate proper profit and loss

To provide fund for replacement of the assets

To show asset at its reasonable value

To evade tax

Solution

Question 5

amortization

depreciation

obsolescence

disposal

Solution

Question 6

Mines

Quarries

Oil reserves

All the three

Solution

Question 7

matching cost

historical cost method

revenue recognizing

going concern concept

Solution

Question 8

Depreciation

Patent right

Copyright

Royalty

Solution

Question 9

Historical cost

Residual value

Depreciable value

None of the above

Solution

Question 10

Discounted estimated scrap value

Current selling price

Historical cost less depreciation

Estimated disposal value

Solution

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