MCQ on Depreciation (Part-1 from Question No. 01 to 20)

 MCQ on Depreciation (Part-1 from Question No. 01 to  20)

1. Depreciation is a process of _________.

A. valuation.

B. reduction.

C. allocation.

D. appreciation.

2. The main objective of providing depreciation is _______.

A. to calculate true profit.

B. to calculate financial position.

C. to reduce tax burden.

D. to reduce profit.

3. Depreciation arises because of_____.

A. fall in the market value of an asset.

B. physical wear and tear.

C. fall in the value of money.

D. rise in the value of money.

4. Under the straight line method of charging depreciation, depreciation ____.

A. increases every year.

B. decreases every year.

C. is constant.

D. fluctuate every year.

5. Under the diminishing balance method depreciation is calculated on____.

A. original value.

B. written down value.

C. scrap value.

D. market value.

6. The amount of depreciation charged on machinery will be debited to_____.

A. machinery account.

B. depreciation account.

C. cash account.

D. bank account.

7. Examples of non-trading concerns are ________.

A. Commercial banks

B. Civil hospital

C. Joint stock company

D. Private educational institutions.

8. The accounts of non-trading concerns are generally maintained according to _______.

A. Mercantile accounting system

B. Cash accounting system

C. Double entry book keeping system

D. Single entry system.

9. Depreciation is provided on ________.

A. current asset .

B. fixed assets.

C. fictitious assets.

D. investment.

10. The permanent, continuing and gradual shrinkage in the book value of a fixed asset is called _______.

A. depreciation .

B. appreciation.

C. reduction.

D. computation.

11. Depreciation is charged on the_________.

A. market value.

B. Depreciable value.

C. purchase value.

D. sale value.

12. Depreciation is charged on_________.

A. continuous basis.

B. temporary basis.

C. daily basis.

D. monthly basis.

13. Loss of usefulness occasioned by improved production methods is known as_______.

A. physical deterioration.

B. obsolescence.

C. disuse.

D. inadequacy.

14. Mines, quarries, oilfields and forest are example of _______.

A. fixed assets.

B. current assets.

C. wasting assets.

D. intangible assets.

15. Depreciation applies to________.

A. current assets.

B. wasting assets.

C. intangible assets.

D. fixed assets.

16. The main source of income for non-trading concern is _________.

A. Subscription

B. Sales

C. Dividend on investment

D. entrance fee

17. The control of non-trading concern rest in the hand of

A. Directors

B. Managing agents

C. Governing body

D. Promoters

18. Estimated sale value of the asset at the end of its economic life is known as _____.

A. purchase value.

B. market value.

C. written down value.

D. residual value.

19. Provision for depreciation account appears on the _______.

A. Asset side.

B. Liability side.

C. P & L account debit side.

D. P & L account credit side.

20. If the asset is sold, the provision for depreciation relating to the asset sold is transferred to _______.

A. asset account.

B. liability account.

C. P & L account.

D. trading account.