Chapter 10: Depreciation Accounting — Online MCQ Test
ACCOUNTANCY · CLASS 11th · Tamil Nadu State Board
Practice Chapter 10: Depreciation Accounting with a free chapter-wise online MCQ test.
This chapter covers: Focusing on non-current asset valuation this chapter details depreciation causes objectives and calculation methods including straight line and written down value methods. Students....
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Chapter 10: Depreciation Accounting — Important Questions & Answers
What is the primary objective of charging depreciation?
- A. To ascertain the true profit or loss
- B. To increase the value of assets
- C. To reduce the tax burden only
- D. To increase the cash balance
Answer: A. To ascertain the true profit or loss
Depreciation is charged to match the cost of the asset against the revenue it helps to earn, ensuring true profit or loss is calculated.
Depreciation is charged to match the cost of the asset against the revenue it helps to earn, ensuring true profit or loss is calculated.
Which of the following is considered an internal cause of depreciation?
- A. Market value fluctuation
- B. Wear and tear
- C. Change in government policy
- D. Legal expiry of the asset
Answer: B. Wear and tear
Wear and tear occurring due to constant use is an internal cause of depreciation, whereas others are external factors.
Wear and tear occurring due to constant use is an internal cause of depreciation, whereas others are external factors.
If an asset costs Rs. 50,000 and the scrap value is Rs. 5,000 with a life of 5 years, what is the annual depreciation under the straight-line method?
- A. Rs. 10,000
- B. Rs. 9,000
- C. Rs. 11,000
- D. Rs. 8,000
Answer: B. Rs. 9,000
Depreciation = (Cost - Scrap Value) / Life = (50,000 - 5,000) / 5 = 9,000.
Depreciation = (Cost - Scrap Value) / Life = (50,000 - 5,000) / 5 = 9,000.
A machine was purchased for Rs. 1,00,000. Depreciation is charged at 10% p.a. on WDV. What will be the book value at the end of the second year?
- A. Rs. 80,000
- B. Rs. 81,000
- C. Rs. 85,000
- D. Rs. 90,000
Answer: B. Rs. 81,000
Year 1 depreciation: 10,000 (Value: 90,000). Year 2 depreciation: 9,000 (Value: 81,000).
Year 1 depreciation: 10,000 (Value: 90,000). Year 2 depreciation: 9,000 (Value: 81,000).
Under the 'Provision for Depreciation' method, where is the accumulated depreciation held?
- A. In the Asset Account
- B. In the Capital Account
- C. In a separate Provision for Depreciation account
- D. Directly deducted from the Profit and Loss account
Answer: C. In a separate Provision for Depreciation account
In this method, the asset account is maintained at cost, and accumulated depreciation is tracked in a separate contra-account.
In this method, the asset account is maintained at cost, and accumulated depreciation is tracked in a separate contra-account.