Depreciation Quiz

What is depreciation defined as?

• The increase in the value of physical assets over time

• The decrease in the value of physical assets with the passage of time

• The constant value of physical assets regardless of time

• The exchange of physical assets for new technology

What causes depreciation?

• Improvement in technology

• Wear, deterioration, and obsolete technology

• Maintenance of physical assets

• Investment in new assets

What was the market value of the car at the end of year 2?

• $15,000

• $10,000

• $8,000

• $6,000

How much did the car depreciate in value during the first year?

• $2,000

• $5,000

• $1,000

• $3,000

By the end of year 5, what is the total loss of value of the car from its original price?

• $11,000

• $9,000

• $10,000

• $8,000

Why is depreciation considered in the books of accounts?

• To calculate the company's profit accurately.

• To prepare a balance sheet of assets.

• To track the company's sales.

• To record the employees' salaries.

How is depreciation viewed in terms of business expenses?

• As an investment in future projects.

• As a part of business expenses that increase taxable income.

• As a part of business expenses that reduce taxable income.

• As a non-deductible business expense.

Which of the following is NOT a condition that qualifies an asset for depreciation?

• Assets used in business or held for production of income

• Assets that are expected to increase in value over time

• Assets having a definite useful life and a life longer than one year

• Assets that must wear out, become obsolete or lose value

For an asset to be eligible for depreciation, it must satisfy how many conditions?

• One condition

• Two conditions

• Three conditions

• Four conditions

What is the salvage value in the context of asset depreciation?

• The initial cost of an asset

• The value of an asset after its depreciable life

• The total amount of depreciation that can be claimed over an asset's life

• The method used to calculate depreciation