CBSE Class 11 Accountancy Depreciation Assignment

 Important Questions for NCERT Class 11 Accountancy Depreciation 

Question : A machine is purchased on 1st April, 2018 for Rs. 80,000. Expenses incurred on its installation is Rs. 20,000. The residual value at the end of its expected useful life of 4 years is estimated at Rs. 10,000. The amount of depreciation under Straight Line Method, for the year ended on 31st March, 2019 will be:
(a) Rs. 22,500.
(b) Rs. 20,000.
(c) Rs. 17,500.
(d) Rs. 13,125.

Answer :  A

Question : Depreciation is
(a) Revenue Expenditure.
(b) Capital Expenditure.
(c) Deferred Revenue Expenditure.
(d) None of these.

Answer :  A

Question : What is the amount of difference between the closing balances of two machines after two years is both machines were purchased on the same date with the same amount i.e., for Rs. 1,00,000? Machine I is depreciated by 20% p.a. on Straight Line Method and Machine II is depreciated by 20% p.a. on Diminishing Balance Method:
(a) Value of Machine II is more by Rs.2,000
(b) Value of Machine I is more by Rs.4,000
(c) Value of Machine II is more by Rs.4,000
(d) Value of Machine II is less by Rs.2,000

Answer :  C

Question : Ambuja Cement Ltd. purchased a machine on 1-1-2020 for Rs.1,20,000. Installation expenses were Rs. 10,000. Its residual value after 10 year is Rs.5,000. On 1-03-2020 expenses on its repairs were incurred to the extent of Rs.2,000. Depreciation is provided under straight line method. Books are closed on 31st March every year. The amount of depreciation for the current year will be:
(a) Rs. 3,125
(b) Rs. 3,175
(c) Rs. 12,500
(d) Rs. 12,700

Answer :  A

Question : The balance of machine on 31st March 2020 is Rs.97,200. The machine was purchased on 1st April 2020. Depreciation is charged @10% p.a. by diminishing balance method. The cost price of the machine as on 1st April 2020 would be :
(a) Rs. 1,00,000
(b) Rs.1,20,000
(c) Rs. 1,08,000
(d) Rs. 1,32,000

Answer :  B

Question : Depreciation is provided on:
(a) Current Assets
(b) Intangible Assets
(c) Fixed Assets
(d) Fictitious Assets

Answer :  C

Question : Original cost of an asset is Rs. 1,26,000; Salvage value is Rs.6,000; Useful Life is 6 Years. The rate of depreciation under Straight Line Method will be:
(a) 15.87%
(b) 16.67%
(c) 15.80%
(d) 16.56%

Answer :  A

Question : A machinery which costs Rs. 2,00,000 is depreciated at 25% per year using the Written Down Value Method. At the end of three years, it will have a net book value of
(a) Rs. 1,50,000.
(b) Rs. 84,375.
(c) Rs. 1,12,500.
(d) Rs. 1,00,000.

Answer :  B

Question : In the books of D Ltd. the Machinery Account shows a debit balance of Rs.60,000 as on April 1, 2020 and Provision for Depreciation A/c at Rs.24,000. The machinery was sold on September 30, 2020 for Rs.30,000. The company charges depreciation @20% p.a. on diminishing balance method. Profit / Loss on sale of the machinery is:
(a) Rs. 1,200 Profit
(b) Rs.2,400 Loss
(c) Rs.2,400 Profit
(d) Rs. 1,200 Loss

Answer :  B

Question : What will be the percentage of depreciation under SLM in the following case:
Original Cost of Machine Rs. 1,50,000
Salvage value after 9 years Rs. 15,000
Repair charges in 2nd year Rs. 10,000
(a) 11.11%
(b) 10%
(c) 10.34%
(d) 9.37%

Answer :  B

Question : Depreciation is a
(a) Reserve.
(b) Provision.
(c) Both (a) and (b).
(d) None of these.

Answer :  B

Question : Which one of the following is not a feature of written down value method of depreciation?
(a) The book value of the asset becomes zero at any one point of time
(b) The depreciation is calculated on the book value of assets and not on the cost
(c) The amount of depreciation charged on a specific asset reduces every year.
(d) There is no need to estimate the residual value and estimated life at the time of deciding the amount of depreciation

Answer :  A

Question : Which of the following is not a cause of depreciation
(a) Wear and Tear.
(b) Passage of Time.
(c) Fall in the Market Value.
(d) Accident,

Answer :  C

Question : Which of the following best describes the ‘Depreciation’ ?
(a) Valuation of fixed asset at the end of the year
(b) Verification of assets
(c) Allocation of cost of fixed assets over its useful life
(d) Decreasing the market value of asset

Answer :  C

Question  : The term amortisation is used to write off
(a) Fixed Assets.
(b) Intangible Assets.
(c) Tangible Assets.
(d) Wasting Assets.

Answer :  B

Question : The term depreciation is used to write off
(a) Fixed Assets.
(b) Tangible Fixed Assets other than Land.
(c) Intangible Assets.
(d) Wasting Assets.

Answer :  B

Question : A machine was purchased on 1st April 2020 for Rs.5,00,000 and on 1st October, 2020 a new machine is added for Rs.2,00,000. Calculate the balance of machine account, if depreciation is charged at 20% p.a. on written down value method for the year ending March 31, 2020.
(a) Rs.6,00,000
(b) Rs.5,60,000
(c) Rs.6,60,000
(d) Rs.5,80,000

Answer :  D

Question : Amortisation refers to writing off ............. . ..
(a) Depleting Assets
(b) Wasting Assets
(c) Intangible Assets
(d) Fictitious Assets

Answer :  C

Question  : Depreciation is calculated from the date of .
(a) Purchase of asset
(b) Receipt of asset at business premises
(c) Asset put to use
(d) Asset installed

Answer :  C

Question : A Ltd. purchased a machine on 1.1.2020 for Rs.1,20,000. Installation expenses were Rs.30,000. Residual value after 5 years Rs.5,000. On 1.7.2020, expenses for repair were incurred to the extent of Rs.2,000. Depreciation is provided @10% p.a. under written down value method. Total depreciation after 2nd year
(a) Rs.25,000
(b) Rs. 13,000
(c) Rs. 10,500
(d) Rs.28,500

Answer :  D

Question : Depreciation arises because of
(a) wear and tear.
(b) inflation.
(c) fall in the value of the asset.
(d) None of these.

Answer :  A

Question : The loss on sale of an asset is debited to
(a) reserves.
(b) depreciation fund.
(c) Profit and Loss Account.
(d) None of these.

Answer :  C

Question  : Diminishing Value Method means a method by which
(a) the rate of Depreciation falls year by year.
(b) the amount on which Depreciation is calculated falls year by year.
(c) the rate as well as the amount to which it is applied fall year by year.
(d) None of the above.

Answer :  B

Question  : Straight Line Method of Depreciation is that method under which
(a) Depreciation is charged at a fixed percentage on the book value of the asset.
(b) Depreciation is charged at a fixed percentage on the original cost of the asset.
(e) Depreciation is charged on original cost of asset but the depreciation rate changes.
(d) None of the above.

Answer :  B

Question : The amount of Depreciation charged on machinery is debited to
(a) Depreciation Account.
(b) Machinery Account.
(c) Provision for Depreciation Account.
(d) None of these.

Answer :  A

Question : Which of the following factors affect the amount of depreciation?
(a) Cost of the Asset.
(b) Expected Useful Life of the Asset.
(c) Expected residual value of the Asset.
(d) All of these.

Answer :  D

Question : Depreciation on fixed assets is
(a) cash transaction.
(b) internal transaction.
(c) external transaction.
(d) No transaction at all.

Answer :  B

Question : Which one is not the cause of depreciation?
(a) Efflux of time.
(b) Price fluctuation.
(c) Obsolescence.
(d) Natural wear and tear.

Answer :  B

Question : Amount of depreciation charged under diminishing balance method remains
(a) Increasing.
(b) Decreasing.
(c) Fixed.
(d) Fluctuating.

Answer :  B

Question : Charging depreciation is
(a) compulsory.
(b) voluntary,
(c) dependent on the condition of assets.
(d) None of these.

Answer :  A

Question : Depreciation is a process of
(a) valuation of asset.
(b) allocation of cost.
(c) both of valuation of asset and allocation of cost.
(d) None of the above.

Answer :  B

Question : Depreciation is charged on
(a) Current Assets.
(b) Fixed Assets.
(c) Total Assets.
(d) Fictitious Assets.

Answer :  B

Question  : The W.D.V. of an asset after three years of depreciation on reducing balance method @15% p.a. is Rs.49,130. What was its original value?
(a) Rs.40,000
(b) Rs.80,000
(c) Rs.45,000
(d) Rs.70,250

Answer :  B

Question : Under diminishing balance method, depreciation is charged on
(a) Original Cost.
(b) Written Down Value.
(c) Cost of Production.
(d) Net Profits.

Answer :  B

Question  : An asset was purchased for Rs. 5,00,000 and as per reducing balance method, 20% deprecation is charged each year. What is the value of assets at the end of three years?
(a) Rs. 3,50,000.
(b) Rs. 2,56,000.
(c) Rs. 4,00,000.
(d) Rs. 3,20,000.

Answer :  B

Question. Fixed assets are subject to decline in value and this decline is technically referred to as …………….
(a) Obsolescence
(b) Depreciation
(c) Reduction
(d) None of these
Answer. B

Question. Depreciation means decline in the value of a fixed assets due to
(a) usage of asset
(b) passage of time
(c) obsolescence
(d) All of these
Answer. D

Question. Depreciation, being a charge against profit, is debited to income statement/statement of profit and loss.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. A

Question. ………… issued by The Institute of Chartered Accountants of India (ICAI) defines depreciation.
(a) Accounting Standard-5
(b) Accounting Standard-4
(c) Accounting Standard-6
(d) Accounting Standard-7
Answer. C

Question. Expected useful life of an asset means
(i) the period over which a depreciable asset is expected to be used by the enterprise.
(ii) the number of production of similar units expected to be obtained from the use of the asset by the enterprise.
(a) Only (i)
(b) Only (ii)
(c) Both (i) and (ii)
(d) Neither (i) nor (ii)
Answer. C

Question. Which of the following is/are feature(s) of depreciation?
(i) It is decline in the book value of fixed assets.
(ii) It includes loss of value due to effluxion of time, usage or obsolescence.
(iii) It is a continuing process.
(a) (i) and (ii)
(b) (ii) and (iii)
(c) (i) and (iii)
(d) (i), (ii), (iii)
Answer. D

Question. Depreciation is a cash expense.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. B

Question. Depreciation is deducted before calculating taxable profits.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. A

Question. The term ……………….. is used in the context of extraction of natural resources like mines, quarries, etc., that reduces the availability of the quantity of the material or asset.
(a) depreciation
(b) depletion
(c) amortisation
(d) None of the above
Answer. B

Question.  ………………….. refers to writing-off the cost of intangible assets like patents, copyright, trade marks, franchises, goodwill which have utility for a specified period of time.
(a) Depreciation
(b) Depletion
(c) Amortisation
(d) None of the above
Answer. C

Question. Which of the following is/are cause(s) of depreciation?
(i) Wear and tear due to use or passage of time.
(ii) Expiration of legal rights.
(iii) Obsolescence.
(iv) Abnormal factors.
(a) Only (i)
(b) (i) and (iii)
(c) (i), (iii) and (iv)
(d) (i), (ii), (iii), (iv)
Answer. D

Question. ………………….. implies to an existing asset becoming out-of-date on account of the availability of better type of asset.
(a) Obsolescence
(b) Depletion
(c) Amortisation
(d) None of the above
Answer. A

Question. Obsolescence arises from factors like
(a) technological changes
(b) improvements in production methods
(c) change in market demand for the product or service output of the asset
(d) All of the above
Answer. D

Question. Which of the following points out the need for depreciation?
(i) Matching of costs and revenue
(ii) Consideration of tax
(iii) True and fair financial position
(iv) Compliance with law
(a) Only (i)
(b) (i) and (iii)
(c) (i), (iii) and (iv)
(d) (i), (ii), (iii), (iv)
Answer. D

Question. Depreciation is also charged on current assets.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. B

Question. The main difference between depletion and depreciation is that the former is concerned with the exhaustion of economic resources, but the latter relates to the usage of an asset.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. A

Question.Depreciation provides fund for replacement.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. A

Question. When market value of an asset is higher than book value, depreciation is not charged.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. B

Question. If adequate maintenance expenditure is incurred, depreciation need not be charged.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. B

Question. Which of the following factors affect the amount of depreciation?
(i) Cost of asset
(ii) Tax rate
(iii) Estimated net residual value
(iv) Depreciable cost
(a) Only (i)
(b) (i) and (iii)
(c) (i), (iii) and (iv)
(d) (i), (ii), (iii), (iv)
Answer. C

Question. Which of the following gives the correct formula for calculating the original cost of an asset for depreciation?
(a) Original cost = Purchase price
(b) Original cost = Purchase price + Freight
(c) Original cost = Purchase price + Freight+ Installation cost
(d) None of the above
Answer. C

Question. In case of purchase of a second hand asset, original cost includes initial repair cost to put the asset in workable condition.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. A

Question. ………………… is the estimated net realisable value (or sale value) of the asset at the end of its useful life.
(a) Scrap value
(b) Original cost
(c) Depreciation
(d) None of these
Answer. A

Question. Depreciable cost of an asset is equal to
(a) Cost + Net residual value
(b) Cost - Net residual value
(c) Cost - Depreciation
(d) None of the above
Answer. B

Question. A machine is purchased for Rs 50,000 and is expected to have a useful life of 10 years. At the end of 10th year, it is expected to have a sale value of Rs 6,000 but expenses related to its disposal are estimated at Rs 1,000 Then its net residual value is
(a) Rs6,000
(b) Rs5,000
(c) Rs1,000
(d) None of these
Answer. B

MEANING OF KEY TERMS USED IN THE CHAPTER