MCQs on "Depreciation ": Find the multiple choice questions on "Depreciation ", frequently asked for all competitive examinations.
Here are a few MCQs on Depreciation for your better understanding of the topic.
Q:1.
When you hear the term depreciation, what comes to your mind?
- A. Distribution or allocation of fixed assets among the rightful owners.
- B. Depletion of the price of assets following the modern market demand.
- C. Reduction in the quoted price of any fixed asset in a set pattern.
- D. Increase in value of assets over time.
Q:2.
Why do we need to assess the depreciation value of a particular fixed asset?
- A. It gives us useful strategies applying which we can reduce taxation amount.
- B. It helps us to determine the profit secured in the previous fiscal year.
- C. It is a mandatory rule stipulated by the income tax department.
- D. Through depreciation, we get an idea regarding the net profit of a transaction.
Q:3.
Why do fixed assets need to go through depreciation?
- A. A firm has to face depreciation in asset values due to the piling up of liabilities each year.
- B. A reduction in capital worth leads to depreciation.
- C. Wear and tear resulting from repeated operation reduces the efficiency of pieces of machinery or equipment, thus price decreases.
- D. The particular asset’s net worth gets reduced with time in the market.
Q:4.
How can someone define the terminology ‘obsolete’ in business accounting?
- A. Obsolete refers to a range of similar products that were manufactured to fulfill a purpose and no longer prove to live up to their commitment.
- B. A product status that indicates that there are better options available in the marketplace.
- C. Amount of money spent to reorganize the industry’s inventory.
- D. Disposal of old stuff as the company can afford new variations to garner more profit.
Q:5.
Where does the accountant allocate the charges marked under the depreciation section while preparing the balance sheet?
- A. In a separate account maintained by the firm only to list depreciation costs.
- B. An account that keeps a record of the cash flow.
- C. Machinery account that tracks the costs incurred due to maintenance of equipment and machinery.
- D. Repair folio.
Q:6.
What do you understand by ‘salvage’?
- A. It is the market rate price or the definite selling price determined by the asset vendor.
- B. Salvage value represents the expected disposal value. It is a forecasted metric.
- C. Receivable cash amount that is credited to the depreciation account once the life of a fixed asset ends.
- D. Payable amount by the owner when the asset turns out to be obsolete.
Q:7.
We know that depreciation is evaluated by finding the repair expenses incurred all year round. After that, the balances are tallied in profit and loss folios. This is also termed as diminishing balance method. What is the base information that
- A. Net value of all the fixed assets owned by a firm that is displayed on the balance sheet.
- B. Original market value.
- C. Residual value. It is also referred to as the future price of a fixed asset and is mostly depicted as a percentage value based on its original price
- D. Balance amount
Q:8.
What is the fixed instalment process?
- A. It is the process of assessing the sum of money that is left in an individual saving bank account.
- B. It is an adjustment of transaction entries to a company’s business account that is evaluated to show that debit and credit scores are the same.
- C. It is a methodology that states the total depreciation experienced every year is the same and fixed.
- D. It is the quotient received by dividing the net price amount by the total useful year cycles.
Q:9.
Choose the correct option from the choices given below:
“The depreciation amount of any fixed asset is never going to beat its _______”
- A. Original price
- B. Balance amount
- C. Residual value
- D. Estimated depreciable value.
Q:10.
What is the need to prepare a separate account for tracking the depreciable values?
- A. This is mandatory otherwise one may not understand the current valuation of assets.
- B. One must get an idea of depreciation to figure out the net liabilities.
- C. Depreciation helps us in planning the new set of assets.
- D. Depreciation facilitates the charging of costs of individual assets against the profit made.
