Tag: accountancy

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Questions Related to accountancy

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

While charging depreciation during sale of asset, ________ is Credited.

  1. Asset A/c

  2. Depreciation A/c

  3. Profit and loss A/c

  4. None
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

As per the golden rules of accounting for nominal account all expenses and losses are debited and all income and gains are credited and for rael account, what comes in debit and what goes out is credit.

In the light of above rule, journal entry for providing depreciation and charging it to profit and losss A/c is -
1. Depreciation A/c     Dr.
        To Asset A/c 
(Being depreciation chargedd to asset)
2. Profit and loss A/c  Dr.
         To Depreciation A/c 
(Being depreciation expense transferred to P&L A/c).

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

Any addition or extension to asset must be ________ its useful life of that asset.

  1. Depreciated

  2. Appreciated

  3. Ignored

  4. Separated
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option A is the Correct one.

Depreciation is must on every Fixed assets and on its addition or extension 
for that there are three basic condition.
1.The Assets must be Fixed Tangible Assets
2.The Assets must be used for Business Purpose

3.The must have limited life
Note :- Land has not limited or specific life therefore we can't calculate depreciation on Land.

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

The amount of depreciation charged on machinery is debited to ________ account.

  1. Depreciation

  2. Machinery

  3. Provision of Depreciation

  4. Fixed Asset
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Depreciation is charged on a certain percentage on each of the asset every year. Depreciation is an indirect cost for which the following entry will be passed:


Depreciation A/c                            Dr.
     To Asset A/c 

Later on, depreciation a/c will be transferred to profit & loss a/c. 

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

The Profit on Sale of an asset is debited to ________ Account.

  1. Profit and Loss

  2. Reserve

  3. Asset

  4. Balance Sheet
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

On sale of any asset, there must be some profit/loss as the amount realized on sale may be more or less compared to the written down value. If the sale proceed is more than the written down value, there will be a profit and if the sale proceed is less than the written down value, there will be a loss. 


Profit on sale of asset is debited to asset and credited to profit & loss a/c. 

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

Revaluation of assets is carried out through _________.

  1. profit and loss A/c

  2. profit and loss adjustment A/c

  3. profit and loss appropriation A/c

  4. general reserve A/c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

b'whenever a partner exits a partnership, the books of accounts of such a firm have to be settled. the outgoing partner or his legal representative have to be paid their dues. so that revaluation of assets is carried out through profit and loss account.'

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

Loss on disposal of assets is credited to _____________.

  1. Depreciation a/c

  2. Assets a/c

  3. Loss on sale of assets a/c

  4. Profit and loss a/c
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The disposal of assets involves eliminating assets from the accounting records. This is needed to completely remove all traces of an assets from the balance sheet. An asset disposal may require the recording of a gain or loss on the transaction in the reporting period when the disposal occurs. The journal entry recorded as Debit cash for the  amount received , debit all accumulated depreciation, debit  the loss on sale of asset account, and credit the fixed asset.

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

A purchased a machine for Rs. $200,000$ and incurred Rs. $5000$ on its installation and commissioning. After $3$ yrs it is sold for Rs. $100,000$ resulting into a loss of Rs. $44,850$. The book value of the machine on the date of sale is ___________.

  1. Rs. $200000$

  2. Rs. $205000$

  3. Rs. $144850$

  4. Rs. $139850$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Book value of the asset on the date of sale = Selling cost of asset + Loss on sale of assets

Book value of the asset on the date of sale = Rs. 1,00,000 + Rs. 44,850 = Rs. Rs. 1,44,850

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

If a concern proposes to discontinue its business from March 2015 and decides to dispose of all its assets within a period of $4$ months, the Balance Sheet as on March 31, 2015 should indicate the assets at their ______.

  1. Historical cost

  2. Net realizable value

  3. Cost less depreciation

  4. Cost price or market value, whichever is lower
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When a business is discontinuing and liquidating assets within a short period, the going concern assumption is no longer valid. Assets are valued at their net realizable value, which is the expected selling price minus disposal costs.

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

B Ltd acquired a machine on 1st January, 2010 at a cost of Rs. $14,000$ and spent Rs. $1,000$ on its installation. The firm writes off depreciation at $10$% p.a. of the original cost every year. The books are closed on 31st December every year. After 3 years machine sold for Rs. $13,000$. Profit/Loss on sale = ?

  1. Profit - Rs. $2,500$

  2. Loss - Rs. $2,500$

  3. Profit - Rs. $2,200$

  4. Loss - Rs. $2,200$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Total cost = 14000 + 1000 = 15000. Annual depreciation = 10% of 15000 = 1500. After 3 years, total depreciation = 1500 * 3 = 4500. Book value = 15000 - 4500 = 10500. Sale price = 13000. Profit = 13000 - 10500 = 2500.

Multiple choice accountancy depreciation accounting asset disposal account disposal of asset disposal of asset and any addition or extension to the existing asset

A Ltd. acquired a machine on 1st January, 2010 at a cost of Rs. $14,000$ and spent Rs. $1,000$ on its installation. The firm writes off depreciation at $10$% p.a. of the original cost every year. The books are closed on 31st December every year. After 3 years machine sold for Rs. $9,000$. Profit/Loss on sale = ?

  1. Profit-Rs. $1,500$

  2. Loss- Rs. $1,500$

  3. Profit - Rs. $800$

  4. Loss - Rs. $800$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Total cost = 15000. Annual depreciation = 1500. After 3 years, book value = 15000 - 4500 = 10500. Sale price = 9000. Loss = 10500 - 9000 = 1500.