Depreciation Provisions and Reserves Test

Result

Depreciation Provisions and Reserves Test - 68

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

Depreciation is a process of:

A
Valuation of charge

B
Allocation of cost

C
Valuation of Profit

D
Valuation of assets

Solution

To fullfill the matching concept, we allocate depreciation amount over the useful life of assets. Because we receive benefits over the useful life of the asset. So charging of whole depreciation in one year will be wrong.
Question 2
1 / -0

What happens to the carrying amount of an asset under the WDV method?

A
It increases each year.

B
It remains constant throughout the asset's useful life.

C
It decreases each year.

D
It fluctuates randomly.

Solution

The carrying amount of an asset decreases each year under the WDV method because depreciation is charged as a percentage of the remaining book value, leading to a reduction in the asset's value over time.
Question 3
1 / -0

To whom does the reserves belong to:

A
Creditors

B
Proprietor

C
Seller

D
Debtor

Solution

Reserves are created out of the profits of the business. Since the profits belong to the propreitor the accumulation of the profits in the form of reserves belong to the owner.
Question 4
1 / -0

Depreciation arise due to:

A
Fall in the value of money

B
Normal wear and tear

C
Fall in the market value

D
None of these

Solution

Since fixed assets are continuously used during the normal course of the business they tend to be obselete. Hence the value of the assets are reduced by charging depreciation. Depreciation arises due to the normal wear and tear of the business.
Question 5
1 / -0

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

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 6
1 / -0

What is the primary characteristic of the Written Down Value (WDV) method of depreciation?

A
Depreciation is charged at a fixed rate each year.

B
Depreciation expense decreases over time.

C
Depreciation expense increases over time.

D
Depreciation expense remains constant throughout the useful life of the asset.

Solution

The WDV method, also known as the reducing balance method, calculates depreciation as a fixed percentage of the diminishing book value of the asset. This results in higher depreciation charges in the earlier years, gradually decreasing over time.
Question 7
1 / -0

Which of the following is the normal balance of an accumulated depreciation account?

A
Debit

B
Credit

C
Both

D
None

Solution

Accumulated depreciation account is shown in the liabilities side of the balance sheet. The depreciation to be charged on a fixed asset is accumulated year after year and shown in a separate account called accumulated depreciation account. This account shows a credit balance.
Question 8
1 / -0

Reserve created for maintaining a stable rate of dividend is termed as:

A
Capital Reserves

B
General Reserves

C
Dividend equalization fund

D
Specific Reserves

Solution

Dividends are issued by a company when they earn profits. In a year when the company incurs a loss and is not able to pay out dividends to its shareholders or when the profits are not sufficient enough to pay same rate of dividend, then dividend equalisation reserve helps in mainitaining the same rate of dividend.
Question 9
1 / -0

Which of the following best describes depreciation?

A
Increase in the value of an asset over time

B
Decrease in the value of an asset over time

C
Maintenance of the value of an asset over time

D
Irrelevant to the value of an asset

Solution

Depreciation is the decrease in the value of an asset over time. Depreciation refers to the reduction in the value of an asset due to various factors such as wear and tear, obsolescence, etc.
Question 10
1 / -0

If the amount of any known liability can not be determined with accuracy:

A
A reserve should be set aside

B
A asset should be provided

C
A liability should be provided

D
A provision should be made

Solution

Prudence concept is to only record a revenue transaction or an asset when it is certain, and record an expense transaction or liability when it is probable. Hence Liability should be created in form of provision.

User

Question Analysis

Correct -
Wrong -
Skipped -

My Perfomance

Score
-
out of -
Rank
-
out of -

Re-Attempt Weekly Quiz Competition

Depreciation Provisions and Reserves Test - 68

Result

Depreciation Provisions and Reserves Test - 68

Score

-

Rank

-

SHARING IS CARING

Question 1

Valuation of charge

Allocation of cost

Valuation of Profit

Valuation of assets

Solution

Question 2

It increases each year.

It remains constant throughout the asset's useful life.

It decreases each year.

It fluctuates randomly.

Solution

Question 3

Creditors

Proprietor

Seller

Debtor

Solution

Question 4

Fall in the value of money

Normal wear and tear

Fall in the market value

None of these

Solution

Question 5

Profit account

Reserves account

Asset disposal account

Sales account

Solution

Question 6

Depreciation is charged at a fixed rate each year.

Depreciation expense decreases over time.

Depreciation expense increases over time.

Depreciation expense remains constant throughout the useful life of the asset.

Solution

Question 7

Debit

Credit

Both

None

Solution

Question 8

Capital Reserves

General Reserves

Dividend equalization fund

Specific Reserves

Solution

Question 9

Increase in the value of an asset over time

Decrease in the value of an asset over time

Maintenance of the value of an asset over time

Irrelevant to the value of an asset

Solution

Question 10

A reserve should be set aside

A asset should be provided

A liability should be provided

A provision should be made

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.