Accounting Mcqs

Page No. 48

Depreciation is calculated on the____________?


aCost price of asset

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bMarket price

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cCost+ Transport+ Installation expenses

✓


dCost or market values whichever is less

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Which of the following statements is correct about Depreciation?


aWhich of the following statements is correct about Depreciation?

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bDepreciation is a charge against profit

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cDepreciation is provided in the books only when there is profit

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dDepreciation is an appropriation of profit

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In which of the following methods, the cost of the asset is spread over in equal proportion during its useful economic life?


aStraight-line method

✓


bWritten down value method

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cUnits-of-production method

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dSum-of-the years‘-digits method

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View Answer Straight-line method

Which of the following factors are primarily considered to determine the economic life of an asset?


aPassage of time, asset usage, and obsolescence

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bTax regulations and SEBI guidelines

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cTax regulations and asset usage

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dSEBI guidelines and Asset usage

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The accounting process of gradually converting the unexpired cost of fixed assets into expenses over a series of accounting periods is_________?


aDepreciation

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bPhysical deterioration of the asset

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cDecrease in market value of the asset

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dValuation of an asset at a point of time

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View Answer Depreciation

Which of the following statements is true with regard to written down value method of depreciation? 0 i. The rate at which the asset is written off reduces year after year ii. The amount of depreciation provided reduces from year to year iii. The rate of depreciation as well as the amount of depreciation reduce year after year iv. The value of the asset gets reduced to zero over a period of time


aOnly (i) above

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bOnly (ii) above

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cBoth (i) and (ii) above

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d(i),(ii) and (iii) above

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View Answer Only (ii) above

The portion of the acquisition cost of the asset yet to be allocated is known as___________?


aWritten down value

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bAccumulated value

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cSalvage value

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dResidual Value

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View Answer Written down value

Depreciation is a process of____________?


aValuation

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b Valuation and allocation

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cAllocation

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dAppropriation

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View Answer Allocation

The main objective of providing depreciation is to?


aCalculate the true profit

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bShow the true financial position in the Balance Sheet

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cProvide funds for replacement of fixed assets

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dBoth A. and B. above

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Which of the following statements best describes the purpose of depreciation?


aRegular reduction of asset value to correspond to changes in market value as the asset ages

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bRegular reduction of asset value to correspond to changes in market value as the asset ages

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cAllocation of cost in a manner that will ensure that Plant and Equipment items are not carried on the Balance Sheet in excess of net realizable value

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dAllocation of the cost of an asset to the periods in which services are received from the asset

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