Depreciation Provisions and Reserves Test

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Depreciation Provisions and Reserves Test - 44

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Question 1
1 / -0

Under the diminishing balance method, depreciation _______.

A
increases every year

B
decreases every year

C
remains constant every year

D
None of them

Solution

In diminishing balance method, depreciation is calculated on book value of the asset at the start of the year instead of principle amount with fixed percentage. In this, the percentage is same but depreciation amount gradually decreases as it is done on book value.
Therefore, B is the correct option.
Question 2
1 / -0

The method is specially suited to natural resources (mines, quarries, sand, pits etc.) is said to be ________.

A
Annuity Method

B
Depletion method

C
Revaluation method

D
Sum of Digits Method

Solution

The depletion method is used for natural resources like mines, quarries, sand, pits etc.
The accounting calculations for depletion is similar to the depreciation of tangible assets or amortization with intangible assets.
Depreciation is a non-cash expense.
Question 3
1 / -0

A boiler was purchased by a company for Rs20 lakh after 2 years its cost came down to Rs10 lakh at present its cost is Rs15 lakh. How will we calculated the depreciation for this asset?

A
It wilt be calculated on the basis of its original cost 20 lakh rupees.

B
It will be calculated on he basis of 15 lakh rupees worth cost

C
It will be calculated on the basis of Rs. 10 lakh cost.

D
It will be calculated by taking the average of all three costs.
Question 4
1 / -0

What impact does depreciation have on the cash account?

A
Depreciation only impacts the cash account if inflation has occurred.

B
Depreciation has no impact on the cash account.

C
Depreciation results in an increase to cash.

D
Depreciation results in a decrease to cash.
Question 5
1 / -0

Which of the term is used to write off in reference to tangible fixed assets?

A
Depreciation

B
Depletion

C
Amortization

D
Both (b) and (c)

Solution

Depreciation is the process of allocating a tangible asset's cost over the course of its useful life.
Hence, the correct option is A.
Question 6
1 / -0

The amount charged to deprecation goes on declining in ________.

A
Depreciation fund method

B
Annuity method

C
Written-down value method

D
None of these
Question 7
1 / -0

Under the diminishing balance method, the depreciation amount __________.

A
constant each year

B
declines each year

C
increases each year

D
None of these

Solution

Under diminishing balance method, depreciation decreases every year. Since the book value reduces every year, hence the amount of depreciation also reduces every year. Under this method, the value of the asset never reduces to zero.
Question 8
1 / -0

Double-declining method is often used in ________.

A
Singapore

B
South Africa

C
Japan

D
India

Solution

Double-Declining Method is also popularly known as reducing Balance Method. Under this method, Depreciation is charged on the reduced balance of the assets.
Question 9
1 / -0

Depreciation is __________ of an asset.

A
Valuation

B
Allocation

C
Sale value

D
All of the above

Solution

The allocation of the cost of a tangible plant asset to expense in the periods, in which services are received from the asset, is termed as Depreciation. Depreciation is any method of allocating such net cost to those periods in which the organization is expected to benefit from the use of the asset.
Thus, the correct option is B.
Question 10
1 / -0

The total depreciation cannot exceed the _______ of an asset.

A
Scrap value

B
Cost value

C
Market value

D
Depreciable value

Solution

The total depreciation charged on an asset cannot exceed its depreciable value as the annual depreciation expense is calculated as the total depreciable value (cost - scrap value) divided by its useful life.

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Re-Attempt Weekly Quiz Competition

Depreciation Provisions and Reserves Test - 44

Result

Depreciation Provisions and Reserves Test - 44

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SHARING IS CARING

Question 1

increases every year

decreases every year

remains constant every year

None of them

Solution

Question 2

Annuity Method

Depletion method

Revaluation method

Sum of Digits Method

Solution

Question 3

It wilt be calculated on the basis of its original cost 20 lakh rupees.

It will be calculated on he basis of 15 lakh rupees worth cost

It will be calculated on the basis of Rs. 10 lakh cost.

It will be calculated by taking the average of all three costs.

Question 4

Depreciation only impacts the cash account if inflation has occurred.

Depreciation has no impact on the cash account.

Depreciation results in an increase to cash.

Depreciation results in a decrease to cash.

Question 5

Depreciation

Depletion

Amortization

Both (b) and (c)

Solution

Question 6

Depreciation fund method

Annuity method

Written-down value method

None of these

Question 7

constant each year

declines each year

increases each year

None of these

Solution

Question 8

Singapore

South Africa

Japan

India

Solution

Question 9

Valuation

Allocation

Sale value

All of the above

Solution

Question 10

Scrap value

Cost value

Market value

Depreciable value

Solution

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