2nd Year Principles of Accounting Chapter 5 TestDepreciation, Provisions and Reserves

Q1. Multiple choice questions (Attempt all · 10 × 1 = 10)

1. The journal entry for depreciation will be:

   1. Depreciation account …Dr To asset account

   2. Depreciation account …Dr To cash account

   3. Depreciation account …Dr To bank account

   4. Asset account …Dr To depreciation account

2. What will be entry when profit is earned on sale of asset:

   1. Cash account …Dr To profit and loss account

   2. Profit and loss account …Dr To cash account

   3. Asset account …Dr To profit and loss account

   4. Profit and loss account …Dr To asset account

3. Which one is the merit of fixed installment method:

   1. Simplicity

   2. Asset can be written of to zero

   3. Useful for providing depreciation on leasehold property, patents and other like assets

   4. All of above

4. The term depreciation is used with reference to:

   1. Tangible assets

   2. Intangible assets

   3. Current assets

   4. Fixed assets

5. We write depreciation on the:

   1. Debit side of trading account

   2. Credit side of trading account

   3. Debit side of profit and loss account

   4. Credit side of profit and loss account

6. The amount of depreciation charged on a machinery will be debited to:

   1. Machinery account

   2. Cash account

   3. Depreciation account

   4. Trading account

7. All expenses involved in carrying and installing the asset to the site:

   1. Cost price of an asset

   2. Sale price of an asset

   3. Market price of an asset

   4. Scrap value of an asset

8. Depreciation is a charge against:

   1. Expense

   2. Revenue

   3. Liability

   4. Capital

9. Under reducing balance method the depreciation is always changed on:

   1. Original cost

   2. Book value

   3. Breakup value

   4. Residual value

10. Fluctuation:

    1. Dos not reduce productive capacity

    2. May rise or fall the value of an asset

    3. Is generally irregular

    4. All of these