Depreciation Quiz

What is the impact of depreciation on financial statements?

• Depreciation has no impact on financial statements

• Depreciation reduces the value of assets on the balance sheet

• Depreciation increases the value of assets on the balance sheet

• Depreciation affects only the income statement

Where is depreciation expense charged?

• Balance Sheet

• Trial Balance

• Cash Flow Statement

• Profit and Loss Account

What are the causes of depreciation?

• Physical improvement, Economy factors, Time factor

• Physical deterioration, Economy factors, Depletion

• Physical deterioration, Economic factors, Time factor

• Physical improvement, Economic factors, Depletion

What is depreciation?

• No change in the value of an asset over time

• Stagnation in the value of an asset over time

• Reduction in the value of an asset over time

• Increase in the value of an asset over time

What is the net book value of an asset?

• Cost price + Total depreciation

• Cost price - Total depreciation

• Cost price / Total depreciation

• Cost price * Total depreciation

What is the reducing balance method of calculating depreciation based on?

• A variable amount charged each year

• A fixed amount charged each year

• A percentage of the cost charged each year

• A percentage of the net book value charged each year

which is not a feature of non-current asset

• Not bought for the purpose of resale

• Long life

• Has a credit balance

• Bought to be used by the business

How is depreciation of assets bought and sold calculated using method 1?

• Depreciation based on one year's ownership equals one year's depreciation

• Depreciation based on one week's ownership equals one week's depreciation

• Depreciation based on one month's ownership equals one month's depreciation

• Full period's depreciation on assets in use at the end of the period

What is the useful life of an asset?

• The number of years a fixed asset is expected to be useful to the business

• The number of years a fixed asset is expected to be useful to the owner

• The number of years a fixed asset is expected to be useful to the market

• The number of years a fixed asset is expected to be useful to the government

What is the provision for depreciation?

• A provision created to record the value of total appreciation on assets separately

• A provision created to record the value of total depreciation on assets separately

• A provision created to record the value of total profit on assets separately

• A provision created to record the value of total loss on assets separately