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This set of MCQs helps students to learn about various important things such as, explain the meaning of depreciation and distinguish it from amortisation and depletion, state the need for charging depreciation and identify its causes, compute depreciation using straight line and written down value methods, record transactions relating to depreciation and disposition of assets, explain the meaning and purpose of creating provisions and reserves, distinguish between reserves and provisions, explain the nature of various types of provisions and reserves including secret reserve.
Asset Disposal A/c is prepared when :
Which of the following is the example of Capital Reserve?
Which of the following is the example of Revenue Reserve?
Under which depreciation method the amount of depreciation expenses remains same throughout the useful life of a fixed asset
What is depreciation?
Which method of depreciation suffers from the limitation of unequal burden on profit and loss account?
Fixed Instalment Method
Reducing Balance Method
Depletion Method
Annuity method
Which method of charging depreciation is accepted by Income Tax Act?
Written down value method
Both Written down value method and Straight Line method
Straight Line method
None of the above
Depreciation helps in determining,
Accurate level of profit
Increases the value of asset
Revenue generation
Increase the burden of tax
Which of the following is not a type of reserve.
Provision for bad debt
General reserve
Workmen compensation fund
Retained earnings
What is the rate of charging depreciation under diminishing method?
12% p.a.
15% p.a.
10% p.a.
Not fixed
By permanent fall in prices
By constant use
By Expiry of time
All of the Above
What Journal Entry will be passed: Value of asset being sold transferred to Asset Disposal Account?
Asset Disposal A/c Dr
Asset A/c Cr
Asset A/c Dr
Asset Sale A/c Dr
Depreciation is a process of:
Allocation of cost
None of the above
Valuation of asset
Both valuation of asset and allocation of cost
