Chapter Exam

Chapter 1: Depreciation — Online MCQ Test

Q: Which of the following is a common cause of depreciation?

Answer: A. Wear and tear — Wear and tear is one of the main causes of depreciation because assets lose utility as they are used.

Q: A machine was purchased for ₹1,00,000 and depreciation is charged at 10% per annum under the straight line method. What is the annual depreciation?

Answer: B. ₹10,000 — Under the straight line method, depreciation is calculated on original cost. 10% of ₹1,00,000 is ₹10,000.

Q: A plant costing ₹2,00,000 is depreciated at 20% per annum by diminishing balance method. What is the depreciation for the first year?

Answer: C. ₹40,000 — Under the diminishing balance method, first-year depreciation is calculated on the original cost. 20% of ₹2,00,000 is ₹40,000.

Q: An asset costing ₹80,000 has a scrap value of ₹8,000 and useful life of 4 years. Which method is generally more suitable if equal charge is desired each year?

Answer: B. Straight line method — The straight line method is suitable when equal depreciation is to be charged every year based on cost less scrap value.

ACCOUNTANCY · CLASS 12 INTERMEDIATE 2 YEAR · Telangana State Board

Practice Chapter 1: Depreciation with a free chapter-wise online MCQ test for Telangana State Board CLASS 12 INTERMEDIATE 2 YEAR ACCOUNTANCY. This chapter covers: This chapter covers depreciation concepts causes methods straight line diminishing balance method ledger accounting asset disposal and provision for depreciation.. AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 1: Depreciation — Important Questions & Answers (FAQ)

Frequently asked questions from Telangana State Board CLASS 12 INTERMEDIATE 2 YEAR ACCOUNTANCY — Chapter 1: Depreciation, with answers and explanations. These are sample questions; the exam has its own separate question set.

What is depreciation?

A. An increase in the value of an asset over time
B. A gradual decrease in the value of a fixed asset due to use and passage of time ✓
C. A liability created for future expenses
D. The profit earned from selling an asset

Answer: B. A gradual decrease in the value of a fixed asset due to use and passage of time
Depreciation means the systematic reduction in the book value of a fixed asset over its useful life due to wear and tear, usage, or time.

Which of the following is a common cause of depreciation?

A. Wear and tear ✓
B. Appreciation in market price
C. Increase in demand for the asset
D. Capital investment by owner

Answer: A. Wear and tear
Wear and tear is one of the main causes of depreciation because assets lose utility as they are used.

A machine was purchased for ₹1,00,000 and depreciation is charged at 10% per annum under the straight line method. What is the annual depreciation?

A. ₹5,000
B. ₹10,000 ✓
C. ₹15,000
D. ₹20,000

Answer: B. ₹10,000
Under the straight line method, depreciation is calculated on original cost. 10% of ₹1,00,000 is ₹10,000.

A plant costing ₹2,00,000 is depreciated at 20% per annum by diminishing balance method. What is the depreciation for the first year?

A. ₹20,000
B. ₹30,000
C. ₹40,000 ✓
D. ₹50,000

Answer: C. ₹40,000
Under the diminishing balance method, first-year depreciation is calculated on the original cost. 20% of ₹2,00,000 is ₹40,000.

An asset costing ₹80,000 has a scrap value of ₹8,000 and useful life of 4 years. Which method is generally more suitable if equal charge is desired each year?

A. Diminishing balance method
B. Straight line method ✓
C. Revaluation method
D. Insurance method

Answer: B. Straight line method
The straight line method is suitable when equal depreciation is to be charged every year based on cost less scrap value.

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Chapter 2: Consignment Accounts