Depreciation MCQs

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MCQS 1 To 10

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1. How do we describe the process of adjusting the value of an asset by recognizing that it is consumed in a way that does not completely eliminate the resource?

(a) Adjustment

(b) Valuation

(d) Waning

Correct! Wrong!

2. If the estimated amount of depreciation on equipment for a period is Rs. 2,000, the adjusting entry to record depreciation would be?

(a) Debit depreciation expense, Rs. 2,000; credit accumulated depreciation, Rs. 2,000

(b) Debit depreciation expense, Rs. Rs. 2,000; credit cash, Rs. 2,000

(d) Debit accumulated depreciation, Rs. 2,000; credit depreciation expense, Rs. 2,000

Correct! Wrong!

3. Which one of the following most closely defines 'Amortization'?

(a) The depreciation of tangible fixed assets

(b) The depreciation of intangible fixed assets

(d) The revaluation of land and buildings

Correct! Wrong!

4. Book value = cost minus _____________?

(a) Current liabilities

(b) Salvage value

(d) Residual value

Correct! Wrong!

5. What is process called, where costs of the natural resources are allocated over its useful life?

(a) Capitalization

(b) Depletion

(d) Depreciation

Correct! Wrong!

6. Depreciation arises due to?

(a) Physical wear and tear of the Asset

(b) Fall in the market value of an Asset

(d) None of these

Correct! Wrong!

7. A machine that cost Rs. 120,000 has accumulated depreciation of Rs. 50,000. The book value of machine is?

(a) Rs. 50,000

(b) Rs. 70,000

(d) Rs. 170,000

Correct! Wrong!

8. What is the process of allocating the cost of intangible assets over its estimated life?

(a) Depreciation

(b) Amortization

(d) Trial balance

Correct! Wrong!

9. Which of the following items is not a non-cash item?

(a) Depreciation expense

(b) Amortization expense

(d) Income tax expense

Correct! Wrong!

10. Depreciable value of an asset is equal to?

(a) Cost + scrap value

(b) Cost + market price

(d) None of the given options

Correct! Wrong!

>> Read Accounting for Deprecation

MCQs 11 To 20

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11. A decrease in value of a fixed asset due to age, wear and tear is known as?

(a) Depreciation

(b) Accumulated Depreciation

(d) Written Down Value

Correct! Wrong!

12. Fixed assets are also called?

(d) Floating assets

Correct! Wrong!

13. Which of the following intangible assets is not amortized?

(a) Patents

(b) Goodwill

(d) Franchises

Correct! Wrong!

14. All of the following are needed for the computation of depreciation except?

(a) Expected disposal date

(b) Cost

(d) Estimated total useful life to the present and future owners

Correct! Wrong!

15. The sale of equipment costing Rs. 8,000, with accumulated depreciation of Rs. 6,700 and sale price of Rs. 2,000, would result in a?

(a) Gain of Rs. 2,000

(b) Gain of Rs. 700

(d) Loss of Rs. 600

Correct! Wrong!

16. Which of the following would not be a basis for estimating the useful life of a piece of equipment?

(a) Years of service

(b) Weight

(d) Hours of service

Correct! Wrong!

17. Firms charge depreciation each year?

(a) To ensure there is enough money in the firm to replace the asset

(b) To spread the cost of the asset over its working life

(d) Because the law states they must be reduced

Correct! Wrong!

18. Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets?

(a) Salvage value

(b) Estimated useful life

(d) Initial cost of the plant assets

Correct! Wrong!

19. Loss in value of an asset owing to the physical deterioration or obsolescence is called?

(a) Book value

(b) Capital gain

(d) Both a & c

Correct! Wrong!

20. Under the straight line method of depreciation?

(a) Amount of depreciation increases every year

(b) Amount of depreciation decreases every year

(d) None of the given options

Correct! Wrong!

>> Red Accumulated Depreciation

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Depreciation

Depreciation Problems

Depreciation MCQs

MCQS 1 To 10

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1. How do we describe the process of adjusting the value of an asset by recognizing that it is consumed in a way that does not completely eliminate the resource?

2. If the estimated amount of depreciation on equipment for a period is Rs. 2,000, the adjusting entry to record depreciation would be?

3. Which one of the following most closely defines 'Amortization'?

4. Book value = cost minus _____________?

5. What is process called, where costs of the natural resources are allocated over its useful life?

6. Depreciation arises due to?

7. A machine that cost Rs. 120,000 has accumulated depreciation of Rs. 50,000. The book value of machine is?

8. What is the process of allocating the cost of intangible assets over its estimated life?

9. Which of the following items is not a non-cash item?

10. Depreciable value of an asset is equal to?

MCQs 11 To 20

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11. A decrease in value of a fixed asset due to age, wear and tear is known as?

12. Fixed assets are also called?

13. Which of the following intangible assets is not amortized?

14. All of the following are needed for the computation of depreciation except?

15. The sale of equipment costing Rs. 8,000, with accumulated depreciation of Rs. 6,700 and sale price of Rs. 2,000, would result in a?

16. Which of the following would not be a basis for estimating the useful life of a piece of equipment?

17. Firms charge depreciation each year?

18. Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets?

19. Loss in value of an asset owing to the physical deterioration or obsolescence is called?

20. Under the straight line method of depreciation?

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