Chapter Exam

Chapter 10: Depreciation Accounting — Online MCQ Test

Q: What is the primary objective of charging depreciation?

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.

Q: Which of the following is considered an internal cause of depreciation?

Answer: B. Wear and tear — Wear and tear occurring due to constant use is an internal cause of depreciation, whereas others are external factors.

Q: 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?

Answer: B. Rs. 9,000 — Depreciation = (Cost - Scrap Value) / Life = (50,000 - 5,000) / 5 = 9,000.

Q: 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?

Answer: B. Rs. 81,000 — Year 1 depreciation: 10,000 (Value: 90,000). Year 2 depreciation: 9,000 (Value: 81,000).

ACCOUNTANCY · CLASS 11th · Tamil Nadu State Board

Practice Chapter 10: Depreciation Accounting with a free chapter-wise online MCQ test for Tamil Nadu State Board CLASS 11th ACCOUNTANCY. 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.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 10: Depreciation Accounting — Important Questions & Answers (FAQ)

Frequently asked questions from Tamil Nadu State Board CLASS 11th ACCOUNTANCY — Chapter 10: Depreciation Accounting, with answers and explanations. These are sample questions; the exam has its own separate question set.

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.

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.

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.

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).

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.

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