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Depreciation MCQ

Chapter depreciation xi

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140 views10 pages

Depreciation MCQ

Chapter depreciation xi

Uploaded by

amitsukhija2009
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Depreciation, Provisions and Reserves Class

11 MCQs Questions
Choose the correct option.
Question 1.
Which of the following methods of depreciation is not recognized by Income
Tax Law?
(a) Straight line Method
(b) None of these
(c) Both, Straight Line and Diminishing Balance Methods
(d) Diminishing Balance Method

Question 2.
Asset Disposal A/c is prepared when :
(a) Provision for Depreciation A/c is prepared
(b) Asset A/c is prepared
(c) Profit & Loss A/c is prepared
(d) Depreciation A/c is prepared

Question 3.
Which of the following is the example of Capital Reserve?
(a) Workmen’s Compensation Fund
(b) None of these
(c) Premium Received on issue of shares or debentures
(d) General Reserve
Question 4.
Which of the following is the example of Revenue Reserve?
(a) Profit on Redemption of Debentures
(b) Profit on Revaluation of Fixed
(c) Investment Fluctuation Fund
(d) Profit on Re-issue of forfeited shares

Question 5.
Dividend Equalisation Reserve is :
(a) Specific Reserve
(b) None of these
(c) Secret Reserve
(d) General Reserve

Question 6.
General Reserves are shown in :
(a) Revaluation Account
(b) Profit and Loss Account
(c) None of these
(d) Balance Sheet

Question 7.
According to Companies Act, 1956 Secret Reserves can be created by:
(a) Only Private Company
(b) Banking and insurance companies
(c) Only Public Company
(d) Companies Registered under Companies Act
Question 8.
The loss on sale of an asset is debited to:
(a) Profit and Loss Account
(b) Trial Balance Cr. Side
(c) Balance Sheet
(d) Trading Account

Question 9.
Depreciation is Charged on :
(a) Current Assets
(b) Fixed Tangible Assets
(c) None of these
(d) Both Current and Fixed Assets

Question 10.
At the end of the year, Depreciation Account is transferred to :
(a) Balance Sheet
(b) Trading Account
(c) Profit & Loss Appropriation Account
(d) Profit & Loss Account

Question 11.
Provision is created by debiting :
(a) Profit and Loss Account
(b) None of these
(c) Profit and Loss Appropriation Account
(d) Trading Account
Question 12.
The cause of Depreciation is :
(a) Wear and tear
(b) Obsolescence
(c) All of these
(d) Usage of Asset

Question 13.
Depreciation is a process of :
(a) Allocation
(b) Valuation
(c) None of these
(d) Depletion

Question 14.
Under Reducing Balance Method, depreciation to be charged :
(a) Scrap Value
(b) None of these
(c) Real Value
(d) Original value

Question 15.
The depreciation charged on an asset will be credited to :
(a) Depreciation A/c
(b) Asset A/c
(c) Bank A/c
(d) Cash A/c

Question 16.
Every fixed asset loses its value due to use or other reasons. This decline
in the value of asset is known as
(a) Amortization
(b) Provisions
(c) Depreciation
(d) Devaluation

Question 17.
Following are the causes of Depreciation except
(a) Wear and tear due to use or passage of time.
(b) normal factors
(c) Expiration of legal rights.
(d) Obsolescence.

Question 18.
Following are the causes of Depreciation except
(a) Natural resources
(b) Fixed asset
(c) Liabilities
(d) Intangible assets
Question 19.
An alternative term used for accumulated depreciation expenses?
(a) Provision for depreciation
(b) Cumulative depreciation
(c) Targeted depreciation
(d) Depletion

Question 20.
Depreciation charged under diminishing method
(a) Increase every year
(b) Decrease every year
(c) Increase in one year and decrease another year
(d) Same every year

Question 21.
Which of the following is not a type of reserve
(a) Provision for bad debt
(b) General reserve
(c) Workmen compensation fund
(d) Retained earnings

Question 22.
What is depreciation?
(a) Cost of using a fixed asset
(b) The value of asset
(c) Portion of a fixed assets cost consumed during the current accounting
(d) Cost of fixed asset’s repair

Question 23.
Depreciation helps in determining
(a) Accurate level of profit
(b) Increases the value of asset
(c) Revenue generation
(d) Increase the burden of tax

Question 24.
What is the rate of charging depreciation under diminishing method?
(a) 12% p.a.
(b) 15% p.a.
(c) 10% p.a.
(d) Not fixed

Question 25.
Under which depreciation method the amount of depreciation expenses
remains same throughout the useful life of a fixed asset
(a) Straight line method
(b) Reducing balance method
(c) Number of units produced method
(d) Machine hours method
Fill in the correct words
Question 1.
Depreciation is decline in the value of ………………….

Question 2.
Installation, freight and transport expenses are a part of ……………….

Question 3.
Provision is a ………………. against profit.

Question 4.
Reserve created for maintaining a stable rate of dividend is termed as
………………….

State whether the following statements are True or False.


Question 1.
Depreciation is a non-cash expense.
Question 2.
Depreciation is also charged on current assets.

Question 3.
Depreciation is decline in the market value of tangible fixed assets.

Question 4.
The main cause of depreciation is wear and tear caused by its usage.

Question 5.
Depreciation must be charged so as to ascertain true profit or loss of the
business.
Question 6.
Depletion term is used in case of intangible assets.

Question 7.
Depreciation provides fund for replacement.

Question 8.
When market value of an asset is higher than book value, depreciation is
not charged.

Question 9.
Depreciation is charged to reduce the value of asset to its market value.

Question 10.
If adequate maintenance expenditure is incurred, depreciation need not be
charged.

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