Principals of Accounting ICOM Part 02 Top 500 + MCQS Download Pdf Chapter 06

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Chapter – 6

DEPRECIATION

Encircle the most appropriate answer among the following options:

1. Depreciation is an:

  1. Expense        
  2. Liability
  3. Revenue
  4. Income

2. The gradual decrease in the efficiency of an asset is called:

  1. Appreciation   
  2. Depletion
  3. Amortization
  4. Depreciation

3. The permanent and continuous diminution in the quality, q of an asset:

  1. Appreciation   
  2. Depletion
  3. Amortization   
  4. Depreciation‘

4. Depreciation means:

  1. Exhaustion of the effective life of an asset
  2. Diminution in intrinsic value of an asset
  3. Reduction in the value of fixed asset due to use in business
  4. All of the above

5. Depreciation which occurs upto certain åfferent normal causes is known as:

  1. Internal depreciation           
  2. Seasonal depreciation
  3. External depreciation
  4. All of these

6. The physical deterioration In asset due to use in business

  1. Depletion
  2. Accident
  3. Obsolescence
  4. Wear and tear

7. Internal causes of depreciation:

  1. Depletion        
  2. Wear and tear
  3. Obsolescence
  4. 1 and 2

8. Decline in the value proportionate to the quantum of production

  1. Depletion      
  2. Accident
  3. Obsolescence
  4. All of these

9. External causes of depreciation:

  1. Depletion        
  2. Accident
  3. Obsolescence
  4. All of the above

10. Decrease In the value of an asset due to change in habit or taste of people

  1. Depletion        
  2. Accident
  3. Obsolescence          
  4. Wear and tear

11. We Write depreciation on the

  1. Debit side of trading account
  2. Credit side of profit and loss account
  3. Debit side of profit and loss account
  4. Credit side of trading account

12. The need for provisions of depreciation Is necessary to:

  1. Ascertainment of true profit or loss
  2. Ascertainment of true cost of production
  3. Replacement of assets
  4. All of the above

13. If depreciation is not taken into account the value of assets in the books

  1. May be more
  2. May be less
  3. No changes
  4. 1 & 2

14. Depreciation

  1. Reduces productive activity  
  2. Is a regular loss
  3. Reduction of value of assets gradually
  4. All of the above

15. Depreciation charged on :

  1. Current assets only
  2. Fixed asset
  3. Both 1&2
  4. None of these

16. According to provisions of company’s ordinance 1984 dividend cannot be declared without:

  1. Appreciation
  2. Depreciation
  3. Amortization
  4. Tax

17. Depreciation occurs

  1. Up to one year           
  2. Up to two years
  3. Till the last day of the estimated working life of asset
  4. Up to the replacement of old asset

18. depreciation is charged on:

  1. Fixed assets only     
  2. Fictitious assets only
  3. Current assets only    
  4. Wasting assets only

19. Depreciation is a charge against

  1. Expense
  2. Revenue
  3. Liability
  4. Capital

20.depreciation may be ascertained exactly in case of

  1. Leasehold property
  2. Machinery
  3. Patent rights
  4. 1 & 3

21 Depreciation of an asset should not exceed

  1. Original cost
  2. Depreciation value
  3. Market value
  4. Scrap value

22 Decrease in value of Intangible assets is known as

  1. Depreciation
  2. Amortisation
  3. Depletion
  4. Appreciation

23 The value of asset at the end of the year will be

  1. Scrap value
  2. Market value
  3. Original value
  4. None of these

24. All expenses involved in carrying and installing he asset to the site

  1. Cost Price of an asset         
  2. Market price of an asset
  3. Sale price of an asset
  4. Scrap value of an asset

25. The period during which the asset will help in earning income of business in

known as

  1. Consumed life
  2. Exhausted life
  3. Working life
  4. None of these

26.The decrease in the value of trademark, copyright, patent etc is termed as:

  1. Depreciation   
  2. Amortization
  3. Reconstruction
  4. Depletion

27. The decrease in the value of mines, quarries etc, termed as:

  1. Depreciation   
  2. Depletion
  3. Amortization   
  4. Reconstruction

28. The term depreciation is used with reference to:

  1. Tangible assets        
  2. Currents assets
  3. Intangible assets        
  4. Fixed asset

29. The change in shape of an asset due to friction, movement etc.is known as:

  1. Accident         
  2. External cause
  3. Wear and tear
  4. Obsolescence

30. The decrease in the value of an asset on account of sheer passage of time is:

  1. Accident         
  2. Efflux of time
  3. Wear and tear
  4. Obsolescence

31. Due to fluctuation in the market prices, the value of an assets

  1. May not change
  2. May increase
  3. May decrease
  4. 2 and 3

32. Which one of the following asset is to be appreciated in value:

  1. Land
  2. Furniture
  3. Building
  4. Machinery

33. Scrap value is also known as

  1. Residual value
  2. Break- up value             
  3. 1 and 2
  4. None of these

34. Under straight line method the amount of depreciation

  1. Decreases every year           
  2. Increases every year
  3. Constant every year
  4. 1 and 2

35.In fixed installment method, depreciation is calculated on:

  1. Book value
  2. Original cost
  3. Market price
  4. a and b

36. The method in which depreciation of an asset is equal each year:

  1. Straight line method
  2. Diminishing balance method
  3. Reducing balance method     
  4. All of these

37 Under reducing balance method, the depreciation is always charged on

  1. Original cost   
  2. Break- up value
  3. Book value    
  4. Residual value

38. Reducing balance method is also known as

  1. Diminishing balance method 
  2. Written down value method
  3. Book value method    
  4. All of these

39. Under diminishing balance method amount of annual åepreciation gradually

  1. Decrease       
  2. COnstant
  3. Increase         
  4. No change

40. Diminishing balance method is suitable for those assets which have

  1. Long life        
  2. Average life
  3. Short life         
  4. Temporary life

41. Which one of the wasting asset

  1. Land   
  2. Mines
  3. Goodwill
  4. Patent

42. Which one of the tangible asset:

  1. Goodwill
  2. Copyright
  3. Trade mark    
  4. Machinery

43. which one of the intangible asset:

  1. Goodwill         
  2. Copyright
  3. Trade mark    
  4. All of these

44. This method is used by income tax authorities for granting depreciation allowance to taxpayers

  1. Straight line method
  2. Fixed installment method
  3. Reducing balance method
  4. All of these:

45.depreciation arises because of

  1. Physical wear and tear
  2. Fall in the market value of an asset
  3. Fluctuation
  4. None of these

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