Practice Test

Q1) Depreciation is a measure of the wearing out, consumption or other loss of a depreciation asset arising from _______. Show Answer

Q2) Depreciation is a ________ shrinkage in the book value of a fixed asset. Show Answer

Q3) Depreciation is generally provided on ________. Show Answer

Q4) On which of the following asset depreciation cannot be provided? Show Answer

Q5) Depreciation is the fall in the ________ of a fixed asset through physical wear and tear due to use or passage of time or from any other cause. Show Answer

Q6) Depreciable assets are assets which _____. Show Answer

Q7) _________ has defined depreciation as "a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, effluxion of time or obsolescence through technology and market changes. Depreciation is allocated so as to charge a fair proportion of depreciable amount in each accounting period during the expected useful life of the asset. Depreciation includes amortization of assets whose useful life is predetermined." Show Answer

Q8) Depreciation Accounting has been defined by the _________ as "a system of accounting which aims to distribute the cost or other basic value of tangible capital assets less salvage (if any) over the estimated useful life of the unit (which may be a group of assets) in a systematic and rational manner. It is a process of allocation and not of valuation." Show Answer

Q9) Which of the following is/are important characteristics of depreciation? Show Answer

Q10) Which of the following is/are important characteristics of depreciation? Show Answer

Q11) Which of the following is/are important characteristics of depreciation? Show Answer

Q12) Which of the following is/are not important characteristics of depreciation? Show Answer

Q13) The fundamental objective of depreciation is/are ________. Show Answer

Q14) Which of the following is/are cause for providing depreciation? Show Answer

Q15) Which of the following is/are cause for providing depreciation? Show Answer

Q16) Which of the following is/are cannot be treated as cause for providing depreciation? Show Answer

Q17) Which of the following is/are the objectives of providing depreciation? Show Answer

Q18) Which of the following is/are the objectives of providing depreciation? Show Answer

Q19) Which of the following is/are the objectives of providing depreciation? Show Answer

Q20) Which of the following is/are not the objectives of providing depreciation? Show Answer

Q21) Which of the following factor affect measurement of depreciation? Show Answer

Q22) Which of the following statement is incorrect? Show Answer

Q23) Under which of following method depreciation is charged uniformly? Show Answer

Q24) Under which of following method depreciation is charged uniformly? Show Answer

Q25) Under which of following method depreciation is not charged uniformly? Show Answer

Q26) Under which of following method depreciation is not charged uniformly? Show Answer

Q27) Under which of following method depreciation charged declines? Show Answer

Q28) Under which of following method depreciation charged does not decline? Show Answer

Q29) Under which of following method depreciation charged does not decline? Show Answer

Q30) Under which of following method depreciation charged does not decline? Show Answer

Q31) Under which of following method depreciation charged does not decline? Show Answer

Q32) ______ method, a fixed proportion of the original cost of the asset is written off each year so that asset account may be reduced to its residual value at the end of its estimated economic useful life. Show Answer

Q33) Which of the following is correct formula for charging depreciation under fixed installment method? Show Answer

Q34) Which of the following is/are advantage of fixed instalment method of charging depreciation? Show Answer

Q35) Which of the following is/are, cannot be treated as advantage of fixed instalment method of charging depreciation? Show Answer

Q36) Which of the following is/are disadvantage of fixed instalment method of charging depreciation? Show Answer

Q37) Depreciation fund method is also known as _______. Show Answer

Q38) ________ method, the amount of depreciation is ascertained in such a way, that if invested every year with compound interest, it will yield an amount equal to the cost of asset. Show Answer

Q39) ________ is a method of depreciation which takes into account the element of interest on capital outlay and seeks to write off the value of the asset as well as the interest lost over the life of the asset. Show Answer

Q40) Under annuity method amount of depreciation _________. Show Answer

Q41) Under _______ method depreciation is provided as a fixed percentage of the written down value of the asset. Show Answer

Q42) Which of the following is/are advantage of reducing balance method/WDV method? Show Answer

Q43) _______ is a method of accelerated depreciation that allocates larger amounts of depreciation as an expense during the earlier years of the life of an asset. Show Answer

Q44) ________ method is applicable in case of wasting assets, e.g., mines, quarries, oil well etc. Show Answer

Q45) Under ________ method depreciation is calculated on the basis of hours worked during the year by the machine. Show Answer

Q46) In case of assets of small value or if the life of the asset cannot be accurately determined ________. Show Answer

Q47) Where the life of the asset is uncertain ______ method of depreciation is applied. Show Answer

Q48) For which of the following Inventory system of depreciation can be applied? Show Answer

Q49) For charging depreciation, on which of the following assets, the depletion method is adopted? Show Answer

Q50) The portion of the acquisition cost of the asset, yet to be allocated is known as _______. Show Answer

Q51) Which of the following is odd one? Show Answer

Q52) Which of the following is odd one with reference to depreciation? Show Answer

Q53) A change in accounting policy e.g. Change in method of depreciation is justified _____. Show Answer

Q54) According to AS-6 "Depreciation Accounting", issued by the ICAI change in method is permitted ________. Show Answer

Q55) Z Ltd. Acquired machinery on 1st January,2011 at a cost of Rs.72,000 and spent Rs.8,000 for its installation. The firm writes off depreciation at 10% p.a. On the original cost every year. Depreciation for 1st & 2nd year as fixed instalment method will be Rs. _______. Show Answer

Q56) Z Ltd. Acquired machinery on 1st January,2011 at a cost of Rs.72,000 and spent Rs.8,000 for its installation. The firm writes off depreciation at 10% p.a. On the original cost every year. Closing balance of machinery for 1st & 2nd year as fixed instalment method will be Rs. ______. Show Answer

Q57) K & Co. Acquired machinery on 1st July,2012 at a cost of Rs.45,000 and spent Rs.5,000 for its installation. The firm writes off depreciation at 10% p.a. On the original cost every year. The books are closed on 31st March, every year. Depreciation for the year ended 31st March,2012 & 31st March,2013 will be Rs. _________ & Rs. ________. Show Answer

Q58) Z Ltd purchased a machine on 01.01.2012 for Rs.12,000. Installation expenses were Rs. 1,000. Residual value after 5 years Rs.500. Depreciation is provided under SLM. Depreciation rate is 10% p.a. Annual depreciation= ? Show Answer

Q59) N Ltd. Purchase machinery for Rs.10,00,000 on 01.01.2012. Installation expenses were Rs.50,000. Life of the asset is 6 years at the end of which asset can be sold at Rs.30,000. Annual depreciation under straight line method will be= ? Show Answer

Q60) Original cost = Rs.1,76,400. Salvage value= Rs.8,400. Useful Life = 6 years. Annual depreciation under SLM = ? Show Answer

Q61) Original cost = Rs.12,00,000. Salvage value= Rs.2,00,000. Useful Life = 10 years. Annual depreciation = ? And rate of depreciation = ? Show Answer

Q62) Machinery costing Rs.20,00,000 was purchased on 1.4.2012. The installation charges amounting Rs.5,00,000 were incurred. The depreciation at 10% p.a. On straight line method for the year ended 31st March,2013 will be _________. Show Answer

Q63) A Ltd. acquired a machine on 1st January, 2010 at a cost of Rs.14,000 and spent Rs.1,000 on its installation. The firm writes off depreciation at 10% p.a. Of the original cost every year. The books are closed on 31st December every year. After 3 years machine sold for Rs.9,000. Profit / Loss on sale = ? Show Answer

Q64) B Ltd. acquired a machine on 1st January,2010 at a cost of Rs.14,000 and spent Rs.1,000 on its installation. The firm writes off depreciation at 10% p.a. Of the original cost every year. The books are closed on 31st December, every year. After 3 years machine sold for Rs.13,000. Profit/Loss on sale = ? Show Answer

Q65) C Ltd. acquired a machine on 1st January, 2010 at a cost of Rs.14,000 and spent Rs.1,000 on its installation. The firm writes off depreciation at 10% p.a. Of the original cost every year. The books are closed on 31st December every year. On 31st May, 2013 machine sold for Rs.8,000. Profit/Loss on sale = ? Show Answer

Q66) Hi-Fi Ltd acquired machinery on 1st January,2012 at a cost of Rs.36,000 and spent Rs.4,000 for its installation. The firm writes off depreciation at 10% p.a. On WDV basis. The books are closed on 31st December. Depreciation for 1st & 2nd year will be Rs. ________ & Rs. _______. Show Answer

Q67) Hi-Fi Ltd acquired machinery on 1st January,2012 at a cost of Rs.36,000 and spent Rs.4,000 for its installation. The firm writes off depreciation at 10% p.a. On WDV basis. The books are closed on 31st December. Closing balance of machinery account for 1st & 2nd year will be Rs. _______ & Rs. _______. Show Answer

Q68) A firm acquired machinery on 1st July, 2011 at a cost of Rs.45,000 and spent Rs.5,000 for its installation. The firm writes off depreciation at 10% per annum on diminishing balance method. The books are closed on 31st March,2012 & 31st March,2013 will be Rs. _______ & Rs. ________. Show Answer

Q69) Y Ltd purchased a machine on 1.1.2012 for Rs.12,000. Installation expenses were Rs.1,000. Residual value after 5 years Rs.500. Depreciation is provided under WDV. Depreciation rate is 20%. Depreciation for 3rd year = ? Show Answer

Q70) N Ltd. Purchase machinery for Rs.1,00,000 on 01.01.2012. Installation expenses were Rs.10,000. Life of the asset is 5 years at the end of which asset can be sold at Rs.5,000. Depreciation rate is 15% on WDV. Depreciation for 4th year = Rs. _______. Show Answer

Q71) T Ltd acquired a machine on 1st January,2010 at a cost of Rs.1,40,000 and spent Rs.10,000 on its installation. The firm writes off depreciation at 15% p.a. WDV. The books are closed on 31st December every year. After 3 years machine sold for Rs.87,000. Profit/Loss on sale = ? Show Answer

Q72) S Ltd acquired a machine on 1st January,2010 at a cost of Rs.1,40,000 and spent Rs.10,000 on its installation. The firm writes off depreciation at 15% p.a. on WDV. The books are closed on 31st December every year. After 3 years machine sold for Rs. 97,000. Profit/ Loss on sale = ? Show Answer

Q73) V Ltd acquired a machine on 1st July, 2010 at a cost of Rs.15,000. The firm writes off depreciation at 10% p.a. On WDV. The books are closed on 31st March every year. On 30th June,2013 machine sold for Rs.8,000. Profit/Loss on sale = ? Show Answer

Q74) Life of an asset is 5 years, Purchase cost-Rs.5,70,000, Installation charges - Rs.30,000. Depreciation as per sum of years digit method for 4th year = ? Show Answer

Q75) Original cost = Rs.1,26,000 ; Salvage value = Nil ; Useful life = 6 years. Depreciation for the first year under sum of years digits method will be _________. Show Answer

Q76) N Ltd purchased a machinery on April, 1, 2008 for Rs.6,00,000. It is estimated that the machinery will have a useful life of 5 years after which it will have no salvage value. If the company follows sum of year digit method of depreciation, the amount of depreciation charged during the year 2012-13 was _________. Show Answer

Q77) Under sum of year digit method depreciation year by year _________. Show Answer

Q78) M/s NZ & Co. Purchased a machine for Rs.10,00,000. Estimated useful life and scrap value were 10 years and Rs.1,20,000 respectively. The machine was put to use on 1.1.2001. If the company follows sum of year digit method of depreciation, the amount of depreciation charged during the year 2007 & 2008 was _______ & _______. Show Answer

Q79) Original cost = Rs.2,01,600.. Salvage value = 9,600. Depreciation for 2nd year by machine hour rate method, if hours for 2nd year was Rs.8,000 and total estimated hours are 80,000. Show Answer

Q80) A new machine costing Rs.1,00,000 was purchased by a company on 1st April,2011. Its useful life is estimated to be 5 years and scrap value at Rs.10,000. The production hours for the next 5 years is as follows:Year Hours2011-12 5,0002012-13 10,0002013-14 12,0002014-15 20,0002015-16 25,000Depreciation for year 2013-14 = ? Show Answer

Q81) Life of an asset is 5 years, Purchase cost: Rs.6,70,000 , Installation charges: Rs.30,000 , Salvage value: Rs.50,000. Total estimated hours machine will work for the 5 years-25,000 hours. If machine works for 5,000 & 8,000 hours in 1st & 2nd year, depreciation as per machine hour rate method will be _______ & _______. Show Answer

Q82) Original cost=Rs.1,26,000. Salvage value=6,000. Depreciation for 2nd year by units of production method, if units produced in 2nd year was 5,000 and total estimated production 50,000. Show Answer

Q83) Original cost=Rs.7,50,000. Installation charges=1,00,000, Salvage value=50,000, Depreciation for 3rd year by units of production Method, if units produced in 3rd year was 40,000 and total estimated production 2,00,000. Show Answer

Q84) Z Ltd purchased a machine having life of 3 years on 1st April,2008 for Rs.50,000. It is decided to provide for the replacement of the machine at the end of 3 years by setting-up a sinking fund. Investment will fetch interest at 12% p.a. Sinking fund tables shows that Rs.0.296349 invested each year will produce Re.1 at the end of 3 years at 12% p.a. The investments are sold for Rs.28,500. Depreciation to be provided for each year=? Show Answer

Q85) Z Ltd purchased a machine having life of 3 years on 1st April,2008 for Rs.50,000. It is decided to provide for the replacement of the machine at the end of 3 years by setting-up a sinking fund. Investment will fetch interest at 12% p.a. Sinking fund tables shows that Rs.0.296349 invested each year will produce Re.1 at the end of 3 years at 12% p.a. The investments are sold for Rs.28,500.Interest for the year ended 31st March,2010=? Show Answer

Q86) Z Ltd purchased a machine having life of 3 years on 1st April,2008 for Rs.50,000. It is decided to provide for the replacement of the machine at the end of 3 years by setting-up a sinking fund. Investment will fetch interest at 12% p.a. Sinking fund tables shows that Rs.0.296349 invested each year will produce Re.1 at the end of 3 years at 12% p.a. The investments are sold for Rs.28,500.Interest for the year ended 31st March,2011=? Show Answer

Q87) Z Ltd purchased a machine having life of 3 years on 1st April,2008 for Rs.50,000. It is decided to provide for the replacement of the machine at the end of 3 years by setting-up a sinking fund. Investment will fetch interest at 12% p.a. Sinking fund tables shows that Rs.0.296349 invested each year will produce Re.1 at the end of 3 years at 12% p.a. The investments are sold for Rs.28,500. Sinking Fund Investment Account balance for the year ended 31st March,2010=? Show Answer

Q88) Z Ltd purchased a machine having life of 3 years on 1st April,2008 for Rs.50,000. It is decided to provide for the replacement of the machine at the end of 3 years by setting-up a sinking fund. Investment will fetch interest at 12% p.a. Sinking fund tables shows that Rs.0.296349 invested each year will produce Re.1 at the end of 3 years at 12% p.a. The investments are sold for Rs.28,500.Sinking Fund Investment Account balance for the year ended 31st March,2011 = ? Show Answer

Q89) Z Ltd purchased a machine having life of 3 years on 1st April,2008 for Rs.50,000. It is decided to provide for the replacement of the machine at the end of 3 years by setting-up a sinking fund. Investment will fetch interest at 12% p.a. Sinking fund tables shows that Rs.0.296349 invested each year will produce Re.1 at the end of 3 years at 12% p.a. The investments are sold for Rs.28,500. Loss on sale of investment for the year ended 31st March,2011=? Show Answer

Q90) NS Ltd purchased a leasehold property on 1st April,2010 for 5 years at a cost of Rs.7,50,000. It decided to write off the lease by annuity method presuming the rate of interest at 14% is Rs.0.291284. Calculations to be made to the nearest rupee. Depreciation to be provided for each year=? Show Answer

Q91) NS Ltd purchased a leasehold property on 1st April,2010 for 5 years at a cost of Rs.7,50,000. It decided to write off the lease by annuity method presuming the rate of interest at 14% is Rs.0.291284. Calculations to be made to the nearest rupee.Interest for the year ended 31st March,2011=? Show Answer

Q92) NS Ltd purchased a leasehold property on 1st April,2010 for 5 years at a cost of Rs.7,50,000. It decided to write off the lease by annuity method presuming the rate of interest at 14% is Rs.0.291284. Calculations to be made to the nearest rupee. Interest for the year ended 31st March,2012=? Show Answer

Q93) NS Ltd purchased a leasehold property on 1st April,2010 for 5 years at a cost of Rs.7,50,000. It decided to write off the lease by annuity method presuming the rate of interest at 14% is Rs.0.291284. Calculations to be made to the nearest rupee. Interest for the year ended 31st March,2013=? Show Answer

Q94) NS Ltd purchased a leasehold property on 1st April,2010 for 5 years at a cost of Rs.7,50,000. It decided to write off the lease by annuity method presuming the rate of interest at 14% is Rs.0.291284. Calculations to be made to the nearest rupee.Interest for the year ended 31st March,2014=? Show Answer

Q95) NS Ltd purchased a leasehold property on 1st April,2010 for 5 years at a cost of Rs.7,50,000. It decided to write off the lease by annuity method presuming the rate of interest at 14% is Rs.0.291284. Calculations to be made to the nearest rupee.Balance of lease account for the year ended 31st March,2011=? Show Answer

Q96) NS Ltd purchased a leasehold property on 1st April,2010 for 5 years at a cost of Rs.7,50,000. It decided to write off the lease by annuity method presuming the rate of interest at 14% is Rs.0.291284. Calculations to be made to the nearest rupee. Balance of lease account for the year ended 31st March,2012=? Show Answer

Q97) NS Ltd purchased a leasehold property on 1st April,2010 for 5 years at a cost of Rs.7,50,000. It decided to write off the lease by annuity method presuming the rate of interest at 14% is Rs.0.291284. Calculations to be made to the nearest rupee.Balance of lease account for the year ended 31st March,2013=? Show Answer

Q98) NS Ltd purchased a leasehold property on 1st April,2010 for 5 years at a cost of Rs.7,50,000. It decided to write off the lease by annuity method presuming the rate of interest at 14% is Rs.0.291284. Calculations to be made to the nearest rupee.Balance of lease account for the year ended 31st March,2014=? Show Answer

Q99) N Ltd purchase machine for Rs.4,75,000 on 1.1.2010 and spent Rs.25,000 on its installation. Rate of depreciation 10% on SLM. Company charge depreciation on SLM up to year ended 31.12.2014. In year 2015 the company wants to change its method of depreciation from SLM to WDV w.e.f. 1.1.2010. To effect the change in method machinery account will be ________. Show Answer

Q100) A firm, which depreciates its machinery at 10% p.a. on WDV method, had on 1st April,2002 Rs.9,72,000 in the debit of machinery account. During the year ended 31st March,2003, a part of the machinery purchased on 1st April,2000 for Rs.80,000 was sold for Rs.45,000 on 1st October,2002 and a new machinery at a cost of Rs.1,50,000 was purchased and installed on the same date, installation charges being Rs.8,000. On 31st March,2003, the firm decided to change its method of charging depreciation from WDV method to SLM with effect from April,2000 the rate of depreciation remaining the same as before.Depreciation on machine sold up to 1.10.2002 in year 2002-2003 will be Rs. _______. Show Answer

Q101) A firm, which depreciates its machinery at 10% p.a. on WDV method, had on 1st April,2002 Rs.9,72,000 in the debit of machinery account. During the year ended 31st March,2003, a part of the machinery purchased on 1st April,2000 for Rs.80,000 was sold for Rs.45,000 on 1st October,2002 and a new machinery at a cost of Rs.1,50,000 was purchased and installed on the same date, installation charges being Rs.8,000. On 31st March,2003, the firm decided to change its method of charging depreciation from WDV method to SLM with effect from April,2000 the rate of depreciation remaining the same as before. Loss on machine sold on 1.10.2002 in year 2002-2003 will be Rs. ________. Show Answer

Q102) A firm, which depreciates its machinery at 10% p.a. on WDV method, had on 1st April,2002 Rs.9,72,000 in the debit of machinery account. During the year ended 31st March,2003, a part of the machinery purchased on 1st April,2000 for Rs.80,000 was sold for Rs.45,000 on 1st October,2002 and a new machinery at a cost of Rs.1,50,000 was purchased and installed on the same date, installation charges being Rs.8,000. On 31st March,2003, the firm decided to change its method of charging depreciation from WDV method to SLM with effect from April,2000 the rate of depreciation remaining the same as before. Extra depreciation due to change in method will be _________. Show Answer

Q103) A firm, which depreciates its machinery at 10% p.a. on WDV method, had on 1st April,2002 Rs.9,72,000 in the debit of machinery account. During the year ended 31st March,2003, a part of the machinery purchased on 1st April,2000 for Rs.80,000 was sold for Rs.45,000 on 1st October,2002 and a new machinery at a cost of Rs.1,50,000 was purchased and installed on the same date, installation charges being Rs.8,000. On 31st March,2003, the firm decided to change its method of charging depreciation from WDV method to SLM with effect from April,2000 the rate of depreciation remaining the same as before.Closing balance of machinery account will be Rs. ________. Show Answer