Depreciation MCQs (11-20)

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

(a) Depreciation

(b) Accumulated Depreciation

(c) Appreciation

(d) Written Down Value

Correct! Wrong!

12. Fixed assets are also called?

(c) Liquid assets

(d) Floating assets

Correct! Wrong!

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

(a) Patents

(b) Goodwill

(c) Copyrights

(d) Franchises

Correct! Wrong!

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

(a) Expected disposal date

(b) Cost

(c) Residual value

(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

(c) Loss 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

(c) Potential production in units

(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

(c) To reduce the profit and thus reduce the dividends they can pay to share holders

(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

(c) Cash needed to replace the plant asset

(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

(c) Depreciation

(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

(c) Amount of depreciation remains constant for every year

(d) None of the given options

Correct! Wrong!

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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