Tag: accountancy

Questions Related to accountancy

Which of the following method is applicable in case of wasting assets, i.e., mines, quarries, oil well etc.?

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. Inventory system of depreciation.

  2. Machine hour rate.

  3. Sum of years digit.

  4. Depletion Method.

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Correct Option: D
Explanation:

Option D is correct. Under this method, depreciation is charged on the basis of output extracted in comparison with the estimated total contents of mines. Steps are : -
1) Total contents of the assets are first estimated in terms of tons, gallons etc. 

2) Thereafter the total cost of the asset is divided by the total units of contents in order to find out the rate of depreciation. 
3)After that, amount of depreciation is calculated on the basis of quantity extracted for a particular year by multiplying with the rate of depreciation so ascertained. 

On 1.1.2015, N Ltd. has a stock of bottles valued at Rs. $8,000$. On 1.7.2015, they purchased additional bottles which amounted to Rs. $5,000$ on 31.12.2015, the stock of bottles were revalued at Rs. $10,500$. Depreciation on bottle = ?

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. Rs. $13,000$

  2. Rs. $8,000$

  3. Rs. $2,500$

  4. Rs. $10,500$

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Correct Option: C

In 2012, S Ltd. acquired a machine at a cost of Rs. $50,000$. The Production Units for first three years are $15,000$; $20,000$ and $25,000$ respectively. Depreciation for the third year = ?

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. Rs. $31,257$

  2. Rs. $18,753$

  3. Rs. $20,833$

  4. None of the above

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Correct Option: C

Sum of years digits method is _________ type of depreciation providing method.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. Uniform charge method

  2. Declining charge method

  3. Depletion method

  4. Group depreciation method

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Correct Option: B

In annuity method interest is calculated on ________.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. the value of the asset at the time of purchase

  2. the value of the asset at the beginning of each year

  3. the value of asset as expected at the end value of asset

  4. Both a & b

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Correct Option: B

When depreciation fund account closes, it transfers its balance to ___________.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. Sinking fund account

  2. New asset account

  3. Old asset account

  4. None of the above

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Correct Option: C

Change in depreciation method requires ________.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. change in consistency

  2. an explanatory paragraph

  3. Both a & b

  4. None of the above

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Correct Option: C

From a coal mine 200 tons of coal was extracted during the year and rate of depreciation is 10%. Depreciation charged as per depletion method will be ________.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. 2000

  2. 20

  3. 200

  4. None of the above

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Correct Option: A

For changing the method of calculation of depreciation an enterprise should not ___________.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. calculate the value of asset by old method on the date of change

  2. calculate the depreciation of the past period of asset by new method

  3. calculate the depreciation of past 

  4. find out the cost value of asset

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Correct Option: A

Sinking fund is created in ___________.

depreciation and causes of depreciation depreciation, provision and reserve depreciation accountancy

  1. Depreciation fund method

  2. Deflection method

  3. Fixed installment method

  4. Annuity method

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Correct Option: A