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Basics of Financial Mathematics Test 32

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Basics of Financial Mathematics Test 32
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  • Question 1
    1 / -0
    Depreciation is generally provided on _______________.
    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. Depreciation represents that part of the cost of a fixed asset to its owner which is not recoverable when the asset is finally out of use by him.
  • Question 2
    1 / -0
    A farmer took a loan at 12% p.a. at S.I. After 4 years he settled the loan by paying Rs. 2,442. What was the principal amount?
    Solution

  • Question 3
    1 / -0
    The number of production of similar units expected to be obtained from the use of an asset by an enterprise is called as ______.
    Solution
    The number of production of similar units expected to be obtained from the use of an asset by an enterprise is called as Useful Life
    Depreciation is a decrease in the value of the fixed assets due to wear and tear, obsolescence and passage of time.
    Depreciation is charged only on the fixed Tangible Assets.
  • Question 4
    1 / -0
    Depreciation is a process of ______________.
    Solution
    solution:
    Depreciation is an accounting process by which a company allocates an asset's cost throughout its useful life
    hence the correct opt: B
  • Question 5
    1 / -0
    Which of the following statement is incorrect?
    Solution
    Depreciation. The value of fixed assets reduce after year because of usage and passage of time.
     Therefore, decrease in their value is considered as an expense or loss incurred in earning revenue and like other expenses or losses, is charged to the Profit and Loss Account.

    The reason for using depreciation is to match a portion of the cost of a fixed asset to the revenue that it generates; this is mandated under the matching principle, where you record revenues with their associated expenses in the same reporting period in order to give a complete picture of the results of a revenue

    Depreciation is an accounting method of allocating the cost of a tangible or physical asset over its useful life or life expectancy. 
  • Question 6
    1 / -0
    Depreciation is a ________ shrinkage in the book value of a fixed asset.
    Solution
    solution:
    Depreciation is defined as “a permanent, continuing and gradual shrinkage in the book value of a fixed asset due to use, wear and tear.
    hence any of the above is right 
    hence the correct option: D
  • Question 7
    1 / -0
    On which of the following asset depreciation cannot be provided?
    Solution
    solution:
    The land asset is not depreciated, because it is considered to have an infinite useful life. 
    During this useful life, they are depreciated, which reduces their cost to what they are supposed to be worth at the end of their useful lives 
    or we can say 
    Depreciation means decrease in value of property through wear, deterioration or obsolescence.  In that sense, land cannot depreciate. Depreciation is allowable only on the value of superstructure on the land and not on the value of land.
    hence the correct option B
  • Question 8
    1 / -0
    The compound interest on $$Rs. 3000$$ for $$3$$ years at $$10\%$$ per annum is
    Solution
    solution:
    $$A = P(1+ \dfrac{r}{n})^{nt}$$
    $$r=$$ interest rate
    $$n=$$ number of times interest applied per time period
    $$t=$$ number of time periods elapsed
    $$A = 3000(1+ \dfrac{10}{100})^{3}$$

    $$A = 3000\times (1.331)$$
    $$A= 3993$$
    $$A= 3000+993$$ 
    here $$993$$ is the compound interest on $$Rs. 3000$$
    hence the correct opt: D 

  • Question 9
    1 / -0
    Which of the term is used to write off in reference to tangible fixed assets?
    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 10
    1 / -0
    Asset that has a limited useful life are termed as:
    Solution
    The assets which have a limited useful life are termed as Depreciable assets. The assets which are held by a business for the production and supply of goods and services, expected to be used for more than an accounting year and have a limited useful life are known as Depreciable Assets.

    Hence, Option (B) is the correct answer.
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