Depreciation(11th Grade > Accountancy ) Questions and answers for exam Preparation

11th Grade > Accountancy

DEPRECIATION MCQs

Total Questions : 61 | Page 1 of 7 pages

Question 1. A fixed asset was bought for Rs 5000. Its accumulated depreciation is Rs 3000 and rate of depreciation is 20%. Calculate its depreciation expenses for the current accounting period using reducing balance method?

Rs 600
Rs 2000
Rs 300
Rs 400

Discuss Question

Answer: Option D. -> Rs 400
:
D
Particulars
Amount
Written Down Value
2000
(5000-3000)
Depreciation
400
(2000*20%)

Question 2. An alternative term used for accumulated depreciation expenses?

Provision for depreciation
Cumulative depreciation
Targeted depreciation
Depletion

Discuss Question

Answer: Option A. -> Provision for depreciation
:
A
An alternative term used for accumulated depreciation expenses is provision for depreciation.

Question 3. At the balance sheet date, the balance in the Accumulated Depreciation Account is:

Transferred to deprecation account
Transferred to asset account
Transferred to profit & loss account
Deducted from assets in the balance sheet

Discuss Question

Answer: Option D. -> Deducted from assets in the balance sheet
:
D
At the balance sheet date,the balance in the Accumulated Depreciation Account is deducted from assets in the balance sheet.

Question 4. When accumulated depreciation is transferred to asset disposal account, Which of the following is correct?

Accumulated Depreciation Account Debit
Asset Disposal Account Credit
Both A & B
None of these

Discuss Question

Answer: Option C. -> Both A & B
:
C
The correct entry would be:
Accumulated Depreciation A/c Dr
To Asset Disposal A/c

Question 5. In which method, depreciation is constant every year and in which method it is higher in the beginning years when compared to later years.

SLM & WDV
WDV & SLM
SLM & SLM
WDV & WDV

Discuss Question

Answer: Option A. -> SLM & WDV
:
A
If a firm is using SLM method, then the amount of depreciation is constant, while if the method of depreciation is WDV the amount of depreciation is higherin the beginning.

Question 6. A vehicle acquired for Rs60,000 on 1st September 2005 and depreciated at 20% on WDV was sold for Rs4,000 on 31st March 2011. Expenses of disposal was Rs200.. What is the gain or loss on disposal?

Rs 600 gain
Rs 11928 gain
Rs 11928 loss
None

Discuss Question

Answer: Option C. -> Rs 11928 loss
:
C
Year
Value
Rate
Dep
WDV
2005-06
60000
0.2
12000
48000
2006-07
48000
0.2
9600
38400
2007-08
38400
0.2
7680
30720
2008-09
30720
0.2
6144
24576
2009-10
24576
0.2
4915.2
19660.8
2010-11
19660.8
0.2
3932.16
15728.64
Loss= Rs 15728+200-4000=11928

Question 7. A piece of machinery worth 4,00,000 is charged depreciation (Straight line method) at 10%. Which account shall be credited for recording depreciation when accumulated depreciation account is maintained

Depreciation account
Machinery account
Accumulated depreciation account
None

Discuss Question

Answer: Option C. -> Accumulated depreciation account
:
C
The correct entry would be
Depreciation A/c Dr
40000
To Accumulated Depreciation A/c
40000

Question 8. A machine acquired for Rs360,000 on 1st April 2006 and depreciated at 10% on WDV was sold for Rs300000 on 31th March 2009. Depreciation is time apportioned. Expenses of disposal amounted to Rs3,000. What is the gain or loss on disposal of the machine to be reported in?

Rs 112000 gain
Rs 34560 loss
Rs 34560 gain
Rs 147440 loss

Discuss Question

Answer: Option C. -> Rs 34560 gain
:
C
Year
Value
Depreciation
WDV
2006-07
360000
36000
324000
2007-08
324000
32400
291600
2008-09
291600
29160
262440
Gain= Rs 300000-262440-3000= Rs 34560

Question 9. Annual depreciation of machine is 40000, cost of machine is 500000, rate of depreciation according to straight-line method will be-

Discuss Question

Answer: Option D. -> 8%
:
D
Depreciation Rate= Rs 40,000/Rs 5,00,000= 0.08 = 8%

Question 10. A piece of machinery worth 1,00,000 is charged depreciation (Straight line method) at 10%. In the journal entry for transfer of depreciaton to income statement, which account shall be credited ?