Fixed assets and Depreciation MCQs 1)What is depreciation? A) Cost of a fixed asset B) Cost of a fixed asset’s repair repair C) The residual value of a fixed asset D) Portion of a fixed asset’s cost consumed during the current accounting period 2)Under hich depreciation method the amount of depreciation expenses remains same throughout the usefu! !ife of a fixed asset method C) Number of units produced method ") #traight #trai ght !ine !i ne method met hod B) Reducing balance method C) D) Machine hours method $)" compan% purchased a &ehic!e for '(* + i!! ,e used for - %ears and its residua! &a!ue is expected to ,e '1* What is the annua! amount of deprecation using straight !ine method of depreciation? ") '1 B) !""" C) #""" D) ##"" .)What is the accumu!ated deprecation? ") #um of a!! a! ! depreciation expenses of a fixed asset B) Depreciation expenses C) Cost of depletion of assets D) $uture value of fixed asset -)Which of the fo!!oing is the norma! ,a!ance of an accumu!ated depreciation account? A) Debit balance /) Credit Cre dit ,a!anc ,a! ancee C) Nil balance ()0o tria! ,a!ance shos the accumu!ated depreciation? A) as a debit item /) as a credit item C) %t doesn’t sho& )Which of the fo!!oing is a dou,!e entr% for depreciation expenses? A) Accumulated depreciation debit and depreciation expenses Credit /) Depreciation expenses exp enses De,it and accumu!ated accumu!at ed depreciation Credit C) Cash Debit and depreciation expenses Credit D) Depreciation expenses Debit and cash Credit )"n a!ternati&e term used for accumu!ated depreciation expenses? ") Pro&ision for depreciation B) Cumulative depreciation C) Targeted Targeted depreciation D) depreciation D) Depletion 3)Which of the fo!!oing is4are a 5ind of depreciation expenses? A) Amorti'ation B) Amorti'ation B) Depletion C) /oth of them 1)" fixed asset as ,ought for '-* +ts accumu!ated depreciation is '$ and rate of depreciation is 26* Ca!cu!ate its depreciation expenses for the current accounting period using reducing ,a!ance method? A) ("" B) !""" C) #"" D) '. 11)+n depreciation ca!cu!ation7 the usefu! !ife of a fixed asset is8 A) a certain figure /) an estimate C) a predetermined figure for all fixed assets
12)Deprecia,!e amount 9 :esidua! &a!ue of a fixed asset ;? A) Depreciation expenses B) Accumulated depreciation C) Cost of the fixed asset D) $uture economic benefits of a fixed asset 1$)Cost of a fixed asset < "ccumu!ated depreciation expenses of the fixed asset;? A) /oo5 &a!ue of a fixed asset B) Maret value of a fixed asset C) *istorical cost of a fixed asset D) Recoverable amount of a fixed asset 1.)=he estimate a,out usefu! !ife of a fixed asset8 A) Can never be changed B) Can ,e changed 1-)Which of the fo!!oing is the correct formu!a for ca!cu!ating depreciation using ser&ice hours method? A) Depreciation;>Cost #crape &a!ue) 4 =ota! hours @ "ctua! hours B) Depreciation+,Cost - Accumulated depreciation) . Total hours / Actual hours C) Depreciation+,Cost - Accumulated depreciation) . Total hours / Total hours D) Depreciation+,Cost - 0crape value) . Actual hours / Total hours 1()=he purchase price of a softare that i!! ,e used for more than 12 months shou!d ,e regarded as8 A) a revenue expenditure B) a capita! expenditure C) a long term expenseD) an accounting period expense 1)@AB firm has imported a machine from a,road* Which of the fo!!oing is = the e!ement of machine’s cost? A) 1urchase price of machine B) %mport dut2 C) Demurrage charges D) :efunda,!e tax 1)" compan% purchased a ne machine for '-7 and machine’s test run as started to ma5e sure that machine or5s proper!%* =here as expense of '- incurred on test run7 hoe&er the sa!e proceeds of test production ere '2* Aou are reEuired to find out the tota! cost of machine? A) 3""4""" B) 3"34""" C) -$7 D) 5634""" 13)Which of the fo!!oing fixed assets is not depreciated in the ordinar% circumstances? A) 1lant and machiner2 B) Building C) and D) 78uipments 2)+n the ca!cu!ation of depreciation7 a!! of the fo!!oing items are actua!!% estimates except8 A) 9seful life B) Residual value C) 0istorica! cost D) 0alvage value 21)Which of the fo!!oing accounting concepts or princip!es reEuire the ca!cu!ation of depreciation of the fixed assets? A) 1rudence concept B) Accrual concept C) Consistenc2 concept D) Matching concept 22)" car as purchased for '--* +ts residua! &a!ue as estimated to ,e '- hi!e its month!% depreciation expenses are '1 using straight !ine method* Which of the fo!!oing is the annua! rate of depreciation?
A) !": /) 2.6 C) !: D) !3: 2$)Under hich method of depreciation the amount of depreciation expenses remains constant throughout the usefu! !ife of a fixed asset A) Reducing balance method B) 9nit of activit2 method C) #traight !ine method D) None of these 2.)"n increase in the &a!ue of fixed asset is referred to as8 A) Depreciation /) "ppreciation C) Maret capitali'ation D) Reverse depreciation 2-)" fixed asset ha&ing ,oo5 &a!ue of '2 as so!d for '1-* Which of the fo!!oing is the gain or !oss on the sa!e of fixed asset? A) 3"" gain B) ;3"" loss C) '- !oss D) ;""" gain 2()/oo5 &a!ue of a fixed asset eEua!s to mar5et &a!ue or sa!e proceeds of a fixed asset if8 A)
loss on sale 2)=he term HHHHHH is genera!!% used for the depreciation of natura! resources A) Amorti'ation /) Dep!etion C) Appreciation D) Disposal value 2)Which of the fo!!oing is a ,io!ogica! asset? A) =and B) Building C) 7nvironment D) i&ing p!ants and anima!s 23)+tems of propert%7 p!ant and eEuipment can ,e recogniIed as assets hen their cost can ,e measured re!ia,!% and it is !i5e!% that the future economic ,enefits associated ith the assets8 A) ?ill increase graduall2 B) ?ill diminish &ith the passage of time C) i!! f!o to the entit% D) &on’t be available $)Under the re&a!uation mode! of fixed assets pro&ided ,% the internationa! accounting standards7 the re&a!uation of the fixed assets shou!d ,e carried out8 A) After ;" 2ears /) on a regu!ar ,asis C) @nce in 3 2ears D) None of them Financial Accounting 1) We can sa% that the ,usiness is in profit7 hen8
A) Assets exceed 7xpenditure B) %ncome exceeds =iabilities C) +ncome exceeds Jxpenditure D) %ncome exceeds =iabilities
2) "ccording to the dou,!e entr% s%stem of accounting7 an account that o,tains ,enefit is8 ") Credit B) Debit C) %ncomeD) No need to sho& as accounting record $) =erm KCreditK meansHHHHHHH ,% the ,usiness* ") :ecei&ing of ,enefits B) %t has no effect on business C) 1roviding of benefits D) %t depends upon items
.) When a ia,i!it% is reduced or decreased7 it is recorded on the8 A) =eft or credit side of the account B) Right or debit side of the account C) Right or credit side of the accountD) eft or de,it side of the account -) When Capita! is increased ,% an amount7 it is recorded on the8 A) Right or debit side of the account B) =eft or credit side of the account C) =eft or debit side of the accountD) :ight or credit side of the account () What t%pe of expenses are paid out of Gross Profit? A)
Trial balance Mc8s ;)Trial balance is prepared to chec accurac2 of ") edger accounts ,a!ances B) Balance sheet balances C) %ncome statement balances D) Cash flo& statement balances !)%f a transaction is completel2 omitted from the boos of accoun ts4 &ill it affect the agreement of a trial balanceA) es /) o C) Transactions cant be omitted #)EEEEEEEE is the common base for preparing a trial balance ") edger accounts B)
C) Account balances are correct D) Mathematica!!% Capita!9ia,i!ities;"ssets ()Trial balance is commonl2 prepared A) $re8uentl2 during the 2ear /) "t the end of an accounting period C) At the end of a month D) At the end of a 2ear H)?hich of the follo&ing &ill affect the agreement of a trial balance A) Complete omission of a transaction /) Partia! omission of a transaction C) 7rror of principle D) Compensating errors I)%f debit balances + credit balances4 trial balance onl2 sho&s or chec the EEEEEEEEEEEE and it does not of balances indicate that no errors &ere made during recording and posting ") "rithmetic accurac% B) 7rrors of commission C) @missions of economic events D) 9nderstatements 6)?hich of the follo&ing account &ith normal balance is sho&n at the debit side of a trial balance A) Rent income account B) Creditors account C) 9nearned income account D) Cash account ;") ?hich of the follo&ing account &ith normal balance is sho&n at the credit side of a trial balance A) Cash account B) Ban account C) 78uipment account D) "ccrued expenses account
