Depreciation is a permanent, continuous and gradual shrinkage in the book value of a fixed asset.
It is the fall in the quality or value of a fixed asset through physical wear and tear due to use or passage of time or from any other cause.
depreciation is a process of allocating the cost of a fixed asset over its estimated useful life in a rational and systematic manner.
The Institute of Charted Accountants of India has defined depreciation as “a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, effluxion of time or obsolescence through technology and market changes. Depreciation is allocated so as to charge a fair proportion of depreciable amount in each accounting period during the expected useful life of the asset. Depreciation includes amortisation of assets whose useful life is predetermined.
Mock test in Depreciation accounting
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Subject :- Fundamentals of Accounting & Auditing
Chapter :- Depreciation accounting – Test 1
Questions :- 25
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Which of the following accounting concepts or principles require the calculation of depreciation of the fixed assets?
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Question 2 of 25
2. Question
1 points
In case of assets of small value or if the life of the asset cannot be accurately determined. ______ method of depreciation is applied.
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Question 3 of 25
3. Question
1 points
Where the life of the asset is uncertain ___ method of depreciation is applied.
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Question 4 of 25
4. Question
1 points
For which of the following inventory system of depreciation can be applied?
I. Animal
II. Loose tools
III. Jars & bottles
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Question 5 of 25
5. Question
1 points
For charging depreciation, on which of the following assets, the depletion method is adopted?
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Question 6 of 25
6. Question
1 points
The portion of the acquisition cost of the asset, yet to be allocated is known as-
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Question 7 of 25
7. Question
1 points
The book value of an asset is defined as –
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Question 8 of 25
8. Question
1 points
Which of the following is odd one?
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Question 9 of 25
9. Question
1 points
Which of the following is odd one with reference to depreciation?
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Question 10 of 25
10. Question
1 points
A change in accounting policy e.g. change in method of depreciation is justified-
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Question 11 of 25
11. Question
1 points
According to AS-6 “Depreciation Accounting”, issued by the ICAI change in method is permitted-
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Question 12 of 25
12. Question
1 points
Original cost=1,76,400. Salvage value=8,400. Useful Life=6 years. Annual depreciation under SLM=?
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Question 13 of 25
13. Question
1 points
Original cost=88,200. Salvage value=4,200. Useful Life=3 years. Depreciation rate=?
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Question 14 of 25
14. Question
1 points
Original cost=12,00,000. Salvage value=2,00,000. Useful Life=10 years. Annual depreciation =? & rate of depreciation=?
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Question 15 of 25
15. Question
1 points
Machinery costing Rs 20,00,000 was purchased on 1.4.2012. The installation charges amounting Rs 5,00,000 were incurred. The depreciation at 10% p.a. on straight line method for year ended 31st march, 2013 will be –
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Question 16 of 25
16. Question
1 points
A Ltd. acquired a machine on 1st january, 2010 at a cost of Rs 14,000 and spent Rs 1,000 on its installation. The writes off depreciation at 10% p.a. of the original cost every year. The books are closed on 31st December every year. After 3 years machine sold for Rs 9,000. Profit/Loss on sale=?
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Question 17 of 25
17. Question
1 points
B Ltd. acquired a machine on 1st january, 2010 at a cost of Rs 14,000 and spent Rs 1,000 on its installation. The firm writes off depreciation at 10% p.a. of the original cost every year. the books are closed on 31st december every year. After 3 years machine sold for Rs 13,000. Profit/Loss on sale =?
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Question 18 of 25
18. Question
1 points
A Ltd. purchased a machine on 1st January , 2006 for Rs 1,20,000. installation expenses were Rs 10,000. Residual value after 5 years Rs 5,000. On 1.7.2006, expenses for repairs were incurred to the extent of Rs 2,000. Depreciation is provided @ 10% p.a. underwritten down value method. Depreciation for the 4th year=?
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Question 19 of 25
19. Question
1 points
Life of an asset is 5 years, purchase cost -Rs 5,70,000, Installation charges-Rs 30,000 Depreciation as per sum of years digit method for 4th year=?
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Question 20 of 25
20. Question
1 points
Original cost = Rs 1,26,000; salvage value =Nil; Useful life =6 years. Depreciation for the first year under sum of years digits method will be …..
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Question 21 of 25
21. Question
1 points
Original cost=Rs 2,01,600. salvage value =Rs 9,600. Depreciation for 2nd year by machine hour rate method, if hours for 2nd year was 8,000 and total estimated hours are 80,000.
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Question 22 of 25
22. Question
1 points
Original cost = Rs 1,20,000. salvage value=6,000. Useful life=6 years. Annual depreciation under SLM=?
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Question 23 of 25
23. Question
1 points
Original cost = Rs 1,00,000. Expected salvage value=2,000. life=6 years. Rate of depreciation p.a. =?
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Question 24 of 25
24. Question
1 points
Original cost = Rs 1,26,000. salvage value=6,000. Depreciation for 2nd year by units of production method, if units produced in 2nd year was 5,000 and total estimated production 50,000.
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Question 25 of 25
25. Question
1 points
N Ltd. purchased a machinery on april 1, 2008 for Rs 6,00,000.it is estimated that the machinery will have a useful life of 5 years which it will have no salvage value. if the company follows sum of the year digit method of depreciation, the amount of depreciation charged during the year 2012-2013 was…
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depreciation methods are Straight Line Method, Depreciation Fund (Sinking Fund) Method, Insurance Policy Method, Annuity Method, Diminishing Balance Method (Reducing Balance Method), Sum of Years’ Digits Method, Double Declining Balance Method, Depletion Method, Machine Hour Rate Method (Service Hours Method), Group Depreciation Method, Inventory System of Depreciation.
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