Thursday, February 3, 2011

Multiple choice questions for Ch # 6. DEPRECIATION


 MCQS
EACH QUESTIONS HAS FOUR POSSIBLE ANSWERS CHOOSE THE CORRECT ANSWER: (T) Means TRUE Answer
(1)
The main object of providing depreciation is:

(a)               To calculate true profit. (T)
(b)              To show true financial position.
(c)              To reduce tax.
(d)              To provide funds for replacement.
(2)
Depreciation arises because of:

(a)               Fall in the market value of an asst.(b)              Physical wear and tear. (T)
(c)              Fall in the value of money.
(d)              None of them.
(3)
Depreciation is a process of:

(a)               Valuation (T)
(b)              Allocation
(c)              Both valuation and allocation
(d)              None of them.
(4)
Under the straight line method of providing depreciation it:

(a)               Increase every year.(b)              Remain constant every year. (T)
(c)              Decreases every year
(d)              None of them.
(5)
Under the diminishing balance method depreciation it:

(a)               Increases every year.(b)              Decreases every year. (T)
(c)              Remain constant every year.
(d)              None of them.
(6)
Under the fixed installment method of providing depreciation it is calculated on:

(a)       Original cost (T)
(b)       on balance amount(c)       On scrap value                       (d)       None of them
(7)
Under the diminishing balance method, depreciation is calculated on:

(a)       Scrap value                             (b)       On original value(c)       On book value (T)
(d)       None of them
(8)
The amount of depreciation charged on a machinery will be debited to:

(a)       Machinery account                (b)       Depreciation account (T)
(c)       Cash account                              d)       Repair account
(9)
Loss on sale of plant and machinery should be written off against:

(a)               Share premium(b)              Depreciation fund account (T)
(c)              Sale account
(d)              Profit & loss account
(10)
Loss on sale of machinery will be:

(a)               Debited on machinery A/c(b)              Credited to machinery A/c (T)
(c)              Credited to profit and loss A/c
(d)              None of them
(11)
Asset which have a limited useful life are termed as:

(a)       Limited assets                       (b)       Depreciation assets (T)
(c)       Unlimited asset                     (d)       None of these
(12)
Process of becoming out of date or obsolete is termed as:

(a)       Physical deterioration          (b)       Depletion(c)       Obsolescence (T)
(d)       Amortization
(13)
Which of the term is used to write off in reference to tangible fixed assets.

(a)       Depreciation(T) (b)       Depletion(c)       Amortization                          (d)       Both (b) and (c)
(14)
The economic factors causing depreciation:

(a)               Time factor(b)              Obsolescence and inadequacy (T)
(c)              Wear and tear
(d)              Money valuation
(15)
Profit prior to incorporation is an example of:

(a)       Capital reserve (T)
(b)       Revenue reserve(c)       Secret reserve                        (d)       None of these
(16)
Total depreciation cannot exceeds its:

(a)       Scrap value                             (b)       Cost value(c)       Market value                          (d)       Depreciable value (T)
(17)
Depreciation value of an asset is equal to:

(a)       Cost + Scrap value                (b)       Cost + Market price(c)       Cost – Scrap value (T)
(d)       None of these
(18)
Depreciation does not depend on fluctuations as:

(a)       Market value of asset (T)
(b)       Cost of price of asset(c)       Scrap value of asset               (d)       None of these
(19)
Depreciation is:

(a)       An income                              (b)       An asset(c)       A loss  (T)
(d)       A liability
(20)
The books value of an asset is obtained by deducting depreciation from its:

(a)       Market value                          (b)       Scrap value(c)       Market + Cost price              (d)       Cost  (T)
(21)
Depreciation fund method is also known as:

(a)               Sinking fund method (T)
(b)              Annuity method
(c)              Sum of years digits method
(d)              None of these
(22)
The method is specially suited to natural resources (mines, quarries, sand, pits etc.) is said to be:

(a)       Annuity method                     (b)       Depletion method  (T)
(c)       Revaluation method              (d)       Sum of digits method
(23)
Double – declining method is often used in the:

(a)       Pakistan                                  (b)       South Africa(c)       Japan                                       (d)       U.S.A (T)
(24)
In the provision method of depreciation the asset always appears at:

(a)       Cost price  (T) (b)       Market Price(c)       Scrap Value                            (d)       None

3 comments:

  1. you should also post the answers

    ReplyDelete
  2. ANSWERS ARE THERE NA.....INDICATED BY (T)

    ReplyDelete
    Replies
    1. I already indicated answers by showing alphabet (T)

      Delete

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