Chapter Exam

Chapter 7: Depreciation — Online MCQ Test

Q: Which of the following is NOT a cause of depreciation?

Answer: C. Increase in demand for products — Increase in demand is not a cause of depreciation; rather, depreciation is caused by wear and tear, obsolescence, and the passage of time.

Q: Formula for depreciation using the Straight Line Method is:

Answer: A. (Cost - Salvage Value) / Useful Life in Years — The Straight Line Method formula is (Cost - Salvage Value) divided by the number of years of useful life, giving equal annual depreciation.

ACCOUNTANCY · Grade 11 · CBSE(NCERT)

Practice Chapter 7: Depreciation with a free chapter-wise online MCQ test for CBSE(NCERT) Grade 11 ACCOUNTANCY. This chapter covers: Provisions. AI-generated questions from basic to board-exam level, with instant results and explanations.

Questions

20m

Time Limit

Attempts Left

10 random questions from this chapter (mixed difficulty)
Questions you've seen before won't repeat until the pool resets
You have 20 minutes — exam auto-submits when time is up
Maximum 3 attempts per chapter
Results and explanations shown immediately after submission

New here? Register free — includes 3 free chapter exams.

Chapter 7: Depreciation — Important Questions & Answers (FAQ)

Frequently asked questions from CBSE(NCERT) Grade 11 ACCOUNTANCY — Chapter 7: Depreciation, with answers and explanations. These are sample questions; the exam has its own separate question set.

What is depreciation?

A. Permanent decrease in the value of an asset due to wear and tear, obsolescence, or passage of time ✓
B. Temporary reduction in asset value
C. Loss incurred due to theft or damage
D. Decrease in market price of an asset

Answer: A. Permanent decrease in the value of an asset due to wear and tear, obsolescence, or passage of time
Depreciation is the permanent and gradual decrease in the value of a fixed asset due to its usage, time, and obsolescence.

Which of the following is NOT a cause of depreciation?

A. Wear and tear
B. Obsolescence
C. Increase in demand for products ✓
D. Passage of time

Answer: C. Increase in demand for products
Increase in demand is not a cause of depreciation; rather, depreciation is caused by wear and tear, obsolescence, and the passage of time.

Formula for depreciation using the Straight Line Method is:

A. (Cost - Salvage Value) / Useful Life in Years ✓
B. (Cost + Salvage Value) / Useful Life in Years
C. (Cost - Salvage Value) × Useful Life in Years
D. Cost × Depreciation Rate

Answer: A. (Cost - Salvage Value) / Useful Life in Years
The Straight Line Method formula is (Cost - Salvage Value) divided by the number of years of useful life, giving equal annual depreciation.

What is the key difference between a Provision and a Reserve?

A. A Provision is for a known liability of uncertain amount; a Reserve is an appropriation of profit for future needs ✓
B. A Provision is voluntary; a Reserve is compulsory
C. A Provision relates to assets; a Reserve relates to liabilities
D. A Provision increases profit; a Reserve decreases profit

Answer: A. A Provision is for a known liability of uncertain amount; a Reserve is an appropriation of profit for future needs
Provisions are created against known liabilities, while Reserves are voluntary appropriations of profits for specific future purposes.

Which of the following statements is MOST LIKELY to be TRUE regarding depreciation provisions?

A. Depreciation is a non-cash expense but is recorded as a provision to allocate asset costs over its useful life in compliance with accounting standards ✓
B. Depreciation is charged only when an asset is sold or becomes obsolete
C. Depreciation can be charged or not charged based on the business's profitability in that year
D. Depreciation provisions are optional and left to the discretion of management

Answer: A. Depreciation is a non-cash expense but is recorded as a provision to allocate asset costs over its useful life in compliance with accounting standards
Depreciation is a non-cash expense provision required by accounting standards to systematically allocate the cost of fixed assets over their useful lives, regardless of profitability.