Tag: reserve and fund

Quizzes (5) Questions (159)

Questions Related to reserve and fund

Multiple choice book keeping and accountancy reserve and fund accounting treatment for depreciation meaning and characteristics of provisions provision for depreciation account

An alternative term used for accumulated depreciation expenses?

  1. Provision for depreciation

  2. Cumulative depreciation

  3. Targeted depreciation

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

Provision for depreciation is an alternative term used for accumulated depreciation expenses. Depreciation expense is recognized on the income statement as a non-cash expense that reduces the company's net income.

Multiple choice book keeping and accountancy reserve and fund accounting treatment for depreciation meaning and characteristics of provisions provision for depreciation account

What is the accumulated depreciation?

  1. Sum of all depreciation expenses of a fixed asset

  2. Depreciation expenses

  3. Cost of depletion of assets

  4. Future value of fixed asset
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Accumulated depreciation is the total amount of a plant asset's cost that has been allocated to depreciation expense (or to manufacturing overhead) since the asset was put into service.

Multiple choice book keeping and accountancy reserve and fund accounting treatment for depreciation meaning and characteristics of provisions provision for depreciation account

On a worksheet, the adjusting entry to account for depreciation of equipment consists of __________.

  1. debit to Depreciation Expense and a credit to Equipment

  2. debit to Depreciation Expense and a credit to Accumulated Depreciation

  3. debit to Equipment and a credit to Accumulated Depreciation

  4. debit to Accumulated Depreciation and a credit to Equipment
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The basic journal entry for depreciation is to debit the Depreciation Expense account (which appears in the income statement) and credit the Accumulated Depreciation account (which appears in the balance sheet as a contra account that reduces the amount of fixed assets).

Multiple choice book keeping and accountancy reserve and fund accounting treatment for depreciation meaning and characteristics of provisions provision for depreciation account

Providing depreciation is compulsory as it reflects ________.

  1. true financial position

  2. makes provision so that in future the replacement asset could be purchased

  3. both a & b

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Depreciation is a systematic allocation of the cost of an asset over its useful life. It ensures the financial statements show the true financial position by matching expenses to revenue and provides for the eventual replacement of the asset.

Multiple choice book keeping and accountancy reserve and fund accounting treatment for depreciation meaning and characteristics of provisions provision for depreciation account

The estimated value of an asset after the expiry of its useful life is called as _______________.

  1. Written Down value

  2. Residual Value (Right Answer)

  3. Accumulated depreciation

  4. Sales value
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

An asset can reach full depreciation when its useful life expires or if an impairment charge is incurred against the original cost, though this is less common.  The balance sheet will still reflect the original cost of the asset and the equivalent amount of accumulated depreciation.

Multiple choice book keeping and accountancy reserve and fund accounting treatment for depreciation meaning and characteristics of provisions provision for depreciation account

Which  of the following is the normal balance of an accumulated depreciation account?

  1. Debit balance

  2. Credit balance

  3. Nil balance

  4. (A) or (B)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Credit balance is the normal balance of an accumulated depreciation account.Accumulated depreciation has a credit balance, because it aggregates the amount of depreciation expense charged against a fixed asset.

Multiple choice book keeping and accountancy reserve and fund accounting treatment for depreciation meaning and characteristics of provisions provision for depreciation account

Provision for Discount on Debtors is_______________.

  1. Debited to Sundry Debtors Account

  2. Credited to Sundry Debtors Account

  3. Debited to Bad Debts Account

  4. Debited to Profit & Loss Account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Provision for discount on debtors is debited to profit and loss account. Provision for depreciation Discount is allowed when our debtors settle our accounts promptly. The amount of discount is an expected loss and has to be recorded in advance. 

Multiple choice book keeping and accountancy reserve and fund accounting treatment for depreciation meaning and characteristics of provisions provision for depreciation account

The balance in the accumulated provision for depreciation account of a company as at the beginning of the year was Rs. 2,00,000 when the original cost of the assets amounted to Rs. 10,00,000. The company charges 10% depreciation on a straight line basis for all the assets including those which have been either purchased or sold during the year. One such asset costing Rs. 5,00,000 with accumulated depreciation as at the beginning of the year of Rs. 80,00,000 was deposited off during the year.
The balance of the accumulated depreciation account at the end of the year considering the current year's depreciation charge would be 

  1. Rs. 2,20,000

  2. Rs. 1,70,000

  3. Rs. 1,20,000

  4. Rs. 2,50,000
Reveal answer Fill a bubble to check yourself
B Correct answer