Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

M/s Ram Co. purchased Machinery on 1st April 2015 for Rs. 100000
Depreciation under Written down value method 10%
Ascertain the Accumulated Depreciation balance as on 31st mar 2018______.

book keeping and accountancy accounting for depreciation factors for determining depreciation factors of depreciation need for depreciation and the factors affecting the amount of depreciation

  1. $Rs..27,100$

  2. $Rs.27,000$

  3. $Rs.27,500$

  4. $Rs.27,200$

Show answer
Correct Option: A
Explanation:

                                             Accumulated Depreciation Account

 Date  Particulars  Amount  Date  Particulars Amount 
31.03.2016 To Balance C/d     10000 31.03.2016   By Depreciation  10000
   Total   10000    Total   10000
 31.03.2017  To Balance c/d   19000  01.04.2016  By Balance b/f  10000
       31.03.2017 By Depreciation   9000
   Total  19000     Total   19000
 31.03.2018  To Balance c/d   27100  01.04.2017  By Balance b/f   19000
       31.03.2018  By Depreciation  8100
   Total   27100    Total  27100
 

Total depreciation during the life cannot exceed _____________.

book keeping and accountancy accounting for depreciation factors for determining depreciation factors of depreciation need for depreciation and the factors affecting the amount of depreciation

  1. its book value

  2. its replacement value

  3. its depreciable value

  4. market value

Show answer
Correct Option: C
Explanation:

The main purpose of depreciation is to reduce the value of an asset over its useful life in such a systematic way that such reduction corresponds with the rate at which depreciation is charged. So the total depreciation over the period of use or simply accumulated depreciation cannot exceed the net book value of the asset or depreciable value. 

The principal factor in measurement of depreciation is/are __________.

book keeping and accountancy accounting for depreciation factors for determining depreciation factors of depreciation need for depreciation and the factors affecting the amount of depreciation

  1. total cost

  2. residual value

  3. useful life

  4. all the three

Show answer
Correct Option: D
Explanation:

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life. Principle factor in measurement of depreciation are total cost of asset, useful life of asset, residual value of the asset.

Excel Enterprises purchased a plant having estimated useful life of $10$ years, however after $5$ years the remaining life of the asset is revised to $3$ years. Rs. $24,000$ being the remaining depreciable amount. The annual depreciation charge after revaluation of remaining life will be ____________.

book keeping and accountancy accounting for depreciation factors for determining depreciation factors of depreciation need for depreciation and the factors affecting the amount of depreciation

  1. $Rs.8,000$

  2. $Rs.4,800$

  3. $Rs.6,000$

  4. $Rs.8,500$

Show answer
Correct Option: A

If cost of an asset is Rs. $8,000$, life is $3$ years and estimated scrap value is Rs. $1,000$, the rate of depreciation under WDV method is ___________.

book keeping and accountancy accounting for depreciation factors for determining depreciation factors of depreciation need for depreciation and the factors affecting the amount of depreciation

  1. $33.3\%$ apprx

  2. $66.6\%$ apprx

  3. $53.6\%$ apprx

  4. $75\%$ apprx

Show answer
Correct Option: C

For charging depreciation, on which of the following assets the depletion method is adopted?

book keeping and accountancy accounting for depreciation factors for determining depreciation factors of depreciation need for depreciation and the factors affecting the amount of depreciation

  1. Plant machinery.

  2. Land and building.

  3. Goodwill.

  4. Wasting assets like mines and quarries.

Show answer
Correct Option: D
Explanation:
Depletion method is used in case of mines, quarries etc. containing only a certain quantity of product. The depreciation is calculated by dividing the cost of asset by the estimated quantity of product likely to be available. Annual depreciation will be the quantity extracted multiplied by the rate per unit.

On $1.1.2015$, N Ltd has a stock of bottles valued at Rs$8,000$. On $1.7.2015$, they purchased additional bottles which amounted to Rs$5,000$ on $31.12.2015$, the stock of bottles were revalued at Rs$10,500$. Depreciation on bottle will be ____________ .

book keeping and accountancy accounting for depreciation factors for determining depreciation factors of depreciation need for depreciation and the factors affecting the amount of depreciation

  1. Rs$13,000$

  2. Rs$8,000$

  3. Rs$2,500$

  4. Rs$10,500$

Show answer
Correct Option: C
Explanation:
Depreciation = opening value - Closing value 
                      = 8,000 + 5,000 - 10,500
                      = 2,500  

Z.Ltd had balance of Rs$4,000$ in its plant account and corresponding balance of accumulated depreciation account of that plant was Rs.$3,200$. This plant was exchanged for new plant. The payment for the new plant consisted of trade - in - allowance of Rs.$1,400$ for the old one and the balance Rs$4,600$ to be paid in cash. The old plant could have been sold for Rs.$1,000$. In relation to this transaction, which of the following statement is correct?

book keeping and accountancy accounting for depreciation factors for determining depreciation factors of depreciation need for depreciation and the factors affecting the amount of depreciation

  1. Provision for depreciation account will be credited by Rs$3,200$.

  2. Rs$5,600$ will be debited to New Plant Account.

  3. Profit & Loss Account will be debited by Rs$200$.

  4. All of the above

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Correct Option: B

The financial statements consist of _______________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. Trial balance

  2. Profit and loss account

  3. Balance sheet

  4. Both (i) and (iii)

  5. Both (ii) and (iii)

Show answer
Correct Option: E
Explanation:

At the end of every financial year, books of account of the business are closed and financial statements are prepared. Financial statements are prepared to know the profitability of the organization for a particular period and also to know the financial position of the business on a particular date. 


Financial statements consist of:
Profit and Loss Account
Balance Sheet.

Most financial advisors are registered with the Securities and Exchange Commission as ____________.

book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

  1. registered representatives

  2. registered investor advisors

  3. registered financial planners

  4. registered securities consultants

Show answer
Correct Option: C