Questions

Q1.

Hunter started in business on 1 April 2018. On that date he purchased Machine A for $26 000 and on 1
December 2018 he purchased Machine B for $16 000.

Depreciation is charged at 10% per annum using the reducing balance method.

A full year's depreciation is charged in the year of purchase and none in the year of disposal.

Calculate the balance on the machinery – provision for depreciation account at 31 March 2019.
(1)
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(Total for question = 1 mark)

(Q18c 4AC1/01, Nov 2021)

Q2.

Tanet prepares his financial statements to 31 March and he provided the following information at 1 April
2021.

On 30 June 2021, a motor vehicle purchased on 1 February 2019 costing $30 000 was sold for $16 400.
The sale proceeds were received by credit transfer.

Tanet depreciates motor vehicles at 20% per annum using the reducing balance method. A full year's
depreciation is charged in the year of purchase but none in the year of disposal.

Calculate the carrying value at 30 June 2021 of the motor vehicle that was sold.
(1)
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.............................................................................................................................................

(Total for question = 1 mark)

(QU17d 4AC1/01, June 2022)

Q3.

On 1 April 2018 Rafiq purchased a motor vehicle at a cost of $48 000

On 1 December 2020 Rafiq sold the motor vehicle to Bilal for $28 000. One half of the sale proceeds
were received by bank transfer on that date and the balance was to be paid on 30 June 2021.

Depreciation is charged at 20% per annum using the reducing balance method. A full year's depreciation
is charged in the year of purchase and none in the year of disposal.

Rafiq prepares financial statements to 31 January.

(i) Calculate the carrying value of the motor vehicle at 1 December 2020.
(2)
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(ii) Prepare the motor vehicle disposal account.

(6)
Motor Vehicle Disposal Account

(Total for question = 8 marks)

(QU18d 4AC1/01, June 2021)

Q4.

Hunter started in business on 1 April 2018. On that date he purchased Machine A for $26 000 and on 1
December 2018 he purchased Machine B for $16 000.

Depreciation is charged at 10% per annum using the reducing balance method.

A full year's depreciation is charged in the year of purchase and none in the year of disposal.

On 1 January 2020 Hunter sold Machine A for $18 000

Calculate the profit or loss on the disposal of Machine A.
(2)
.............................................................................................................................................

.............................................................................................................................................

(Total for question = 2 marks)

(Q18d 4AC1/01, Nov 2021)

Q5.

Complete the document.

(4)

(Total for question = 4 marks)

(Q11a 4AC1/01, SAM 0)

Q6.

Explain one reason why it is necessary to provide for depreciation on non–current assets.
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(Total for question = 2 marks)

(Q18a 4AC1/01, Nov 2023)

Q7.

Arianna is considering investing in a computerised accounting system to help with her business.

Explain two advantages and two disadvantages for Arianna of this proposal.
(8)
Advantages

1 ..........................................................................................................................................

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2 ..........................................................................................................................................

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Disadvantages

1 ..........................................................................................................................................

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2 ..........................................................................................................................................

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 (Total for question = 8 marks)

(Q17d 4AC1/01, SAM 0)

Q8.

Explain, referring to an accounting concept, one reason why it is necessary for a business to account for
depreciation on its non-current assets.
(2)
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(Total for question = 2 marks)

(QU18d 4AC1/01, June 2024)

Q9.

Answer the question with a cross in the box you think is correct . If you change your mind
about an answer, put a line through the box and then mark your new answer with a cross .

Identify the main purpose of providing depreciation on non-current assets.

A To know the profit or loss on disposal

B To provide funds for the replacement of the asset

C To show the market value of the asset

 D To spread the cost of the asset over its useful life

(Total for question = 1 mark)

(QU06 4AC1/01, June 2022)

Q10.

Answer the question with a cross in the box you think is correct . If you change your mind
about an answer, put a line through the box and then mark your new answer with a cross .

A business sells a non-current asset for $3 500. The non-current asset had an original cost of $12 500
and had been depreciated by $8 000

Identify the profit or loss on disposal.

A $1 000 profit

B $1 000 loss

C $4 500 profit

D $4 500 loss

(Total for question = 1 mark)

(QU10 4AC1/01, June 2024)

Q11.

Which one of the following shows the effects of omitting the depreciation charged?

(Total for question = 1 mark)

 (Q10 4AC1/01, Jan 2020)

Q12.

On 1 April 2017 Rosa purchased two motor vehicles costing $50 000 each.

On 1 January 2019 she sold one of the motor vehicles for $35 500. The sale proceeds
were received by cheque.

Depreciation is charged at 20% per annum using the reducing balance method.

A full year's depreciation is charged in the year of purchase and none in the year of disposal.

Prepare the provision for depreciation – motor vehicles account for the year ended 31 March 2019.
Balance the account on that date and bring the balance down on 1 April 2019.
(4)

(Total for question = 4 marks)

(Q16d 4AC1/01, June 2019)

Q13.

Tanet prepares his financial statements to 31 March and he provided the following information at 1 April
2021.

On 30 June 2021, a motor vehicle purchased on 1 February 2019 costing $30 000 was sold for $16 400.
The sale proceeds were received by credit transfer.
Tanet depreciates motor vehicles at 20% per annum using the reducing balance method. A full year's
depreciation is charged in the year of purchase but none in the year of disposal.

Prepare the provision for depreciation motor vehicles account for the year ended 31 March 2022. Balance
the account on that date and bring the balance down on 1 April 2022.
(4)

(Total for question = 4 marks)

(QU17e 4AC1/01, June 2022)

Q14.

(i) On 1 January 2022 the balance on the motor vehicles cost account was $76 600

On 1 March 2022 a motor vehicle was sold for $12 000, payment being received by cheque. This motor
vehicle was originally purchased on 1 January 2020 for $18 000

On 1 June 2022 a new motor vehicle was purchased costing $21 500, paid for by cheque.

Motor vehicles are depreciated at 25% per annum using the reducing balance method. A full year's
depreciation is charged in the year of purchase but none in the year of disposal.

Prepare the following accounts for the year ended 31 December 2022.
(9)
(ii) Identify, indicating with a tick ( ), the effect on gross profit if the purchase of the new vehicle was
treated as revenue expenditure.
(1)

(iii) Explain why the purchase of the new motor vehicle was treated as capital expenditure.
(3)
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(Total for question = 13 marks)

(Q18bc 4AC1/01, Nov 2023)

Q15.

Tanet prepares his financial statements to 31 March and he provided the following information at 1 April
2021.

On 30 June 2021, a motor vehicle purchased on 1 February 2019 costing $30 000 was sold for $16 400.
The sale proceeds were received by credit transfer.

Tanet depreciates motor vehicles at 20% per annum using the reducing balance method. A full year's
depreciation is charged in the year of purchase but none in the year of disposal.

Prepare the disposal account.

(4)

(Total for question = 4 marks)

(QU17f 4AC1/01, June 2022)

Q16.

On 1 April 2017 Rosa purchased two motor vehicles costing $50 000 each.

On 1 January 2019 she sold one of the motor vehicles for $35 500. The sale proceeds
were received by cheque.
Depreciation is charged at 20% per annum using the reducing balance method.

A full year's depreciation is charged in the year of purchase and none in the year of disposal.

Prepare the disposal account.

(4)
 (Total for question = 4 marks)

(Q16e 4AC1/01, June 2019)

Q17.

On 31 December 2019, Lewin sold a motor vehicle, cost $20 000, with a carrying value of $16 000. The
proceeds of the sale, $16 400, were received by cheque.

Prepare the disposal account for the year ended 31 December 2019.
(4)

(Total for question = 4 marks)

(Q13a 4AC1/01, Nov 2020)

Q18.

Nyat provided the following information at 1 January 2019

On 30 September 2019 Nyat sold a motor vehicle for $13 250 and received a cheque in full settlement.
This motor vehicle had been purchased on 1 July 2018 for $16 400

Nyat's policy is to depreciate motor vehicles at 25% per annum using the reducing balance method. A full
year's depreciation is charged in the year of purchase but none in the year of sale.

Prepare the disposal account showing the transfer to the income statement.
(5)
 (Total for question = 5 marks)

(Q18b 4AC1/01, Jan 2020)

Q19.

Hunter started in business on 1 April 2018. On that date he purchased Machine A for $26 000 and on 1
December 2018 he purchased Machine B for $16 000.

A full year's depreciation is charged in the year of purchase and none in the year of disposal.

Prepare the machinery – provision for depreciation account for the year ended 31 March 2020. Balance
the account on this date and bring the balance down on 1 April 2020.

(Total for question = 4 marks)

(Q18e 4AC1/01, Nov 2021)

Q20.

On 1 May 2023 the balance on the motor vehicles cost account was $172 000 and the balance on the
motor vehicles provision for depreciation account was $85 000

On 30 September 2023 Alex sold a motor vehicle for $16 000 and received a bank transfer in full
settlement.

This motor vehicle had been purchased on 31 March 2022 for $36 000 and had a residual value of $8 000

Alex depreciates motor vehicles at 20% per annum using the straight line method.
A full year's depreciation is charged in the year of purchase but none in the year of disposal.

Prepare the motor vehicles – provision for depreciation account for the year ended 30 April 2024. Balance
the account at this date and bring the balance down on 1 May 2024.
(4)

(Total for question = 4 marks)

(QU18c 4AC1/01, June 2024)

Q21.

Nyat provided the following information at 1 January 2019

On 30 September 2019 Nyat sold a motor vehicle for $13 250 and received a cheque in full settlement.
This motor vehicle had been purchased on 1 July 2018 for $16 400
Nyat's policy is to depreciate motor vehicles at 25% per annum using the reducing balance method. A full
year's depreciation is charged in the year of purchase but none in the year of sale.

Prepare the provision for depreciation – motor vehicles account for the year ended 31 December 2019
showing the transfer to the income statement. Balance the account at this date and bring the balance
down at 1 January 2020.
(5)

(Total for question = 5 marks)

(Q18a 4AC1/01, Jan 2020)

Q22.

State one cause of depreciation of a non-current asset.

(1)
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(Total for question = 1 mark)

(Q13b 4AC1/01, Nov 2020)

Q23.

State three factors that may cause a non-current asset to depreciate.

(3)
1 ...........................................................................................................................................

2 ...........................................................................................................................................
3 ...........................................................................................................................................

(Total for question = 3 marks)

(Q16c 4AC1/01, June 2019)

Q24.

State two causes of depreciation.

(2)
1 ..........................................................................................................................................

2 ..........................................................................................................................................

(Total for question = 2 marks)

(QU17a 4AC1/01, June 2022)