Tag: depreciation and causes of depreciation

Questions Related to depreciation and causes of depreciation

In 2012, S Ltd. acquired a machine at a cost of Rs. $50,000$. The Production Units for first three years are $15,000$; $20,000$ and $25,000$ respectively. Depreciation for the third year = ?

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. Rs. $31,257$

  2. Rs. $18,753$

  3. Rs. $20,833$

  4. None of the above

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Correct Option: C

Sum of years digits method is _________ type of depreciation providing method.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. Uniform charge method

  2. Declining charge method

  3. Depletion method

  4. Group depreciation method

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Correct Option: B

In annuity method interest is calculated on ________.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. the value of the asset at the time of purchase

  2. the value of the asset at the beginning of each year

  3. the value of asset as expected at the end value of asset

  4. Both a & b

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Correct Option: B

When depreciation fund account closes, it transfers its balance to ___________.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. Sinking fund account

  2. New asset account

  3. Old asset account

  4. None of the above

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Correct Option: C

Change in depreciation method requires ________.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. change in consistency

  2. an explanatory paragraph

  3. Both a & b

  4. None of the above

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Correct Option: C

From a coal mine 200 tons of coal was extracted during the year and rate of depreciation is 10%. Depreciation charged as per depletion method will be ________.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. 2000

  2. 20

  3. 200

  4. None of the above

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Correct Option: A

For changing the method of calculation of depreciation an enterprise should not ___________.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. calculate the value of asset by old method on the date of change

  2. calculate the depreciation of the past period of asset by new method

  3. calculate the depreciation of past 

  4. find out the cost value of asset

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Correct Option: A

Sinking fund is created in ___________.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. Depreciation fund method

  2. Deflection method

  3. Fixed installment method

  4. Annuity method

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Correct Option: A

Depreciation fund method is also known as ________.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. Sinking fund method

  2. Annuity method

  3. Sum of years digits method

  4. None of these

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Correct Option: A

The method is specially suited to natural resources (mines, quarries, sand, pits etc.) is said to be ________.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. annuity method

  2. depletion method

  3. revaluation method

  4. sum of digits method

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Correct Option: B