Accountancy Unit 10

Under straight line method, the amount of depreciation is

• Increasing every year

• Decreasing every year

• Constant for all the years

• Fluctuating every year

If the total charge of depreciation and maintenance cost are considered, the method that provides a uniform charge is

• Straight line method

• Diminishing balance method

• Annuity method

• Insurance policy method

Under the written down value method of depreciation, the amount of depreciation is

• Uniform in all the years

• Decreasing every year

• Increasing every year

• None of the above

Depreciation is caused by

• Lapse of time

• Usage

• Obsolescence

• a,b and c

For which of the following assets, the depletion method is adopted for writing off cost of the asset?

• Plant and Machinery

• MInes and Quarries

• Building

• Trademark

A depreciable asset may suffer obsolescence due to

• Passage of time

• Wear and tear

• Technological changes

• None of the above

Which method shall be efficient, if repairs and maintenance cost of an asset increases as it grows older.

• Straight line method

• Reducing balance method

• Sinking fund method

• Annuity method

Residual value of an asset means the amount that it can fetch on sale at the ___of its useful life.

• Beginning

• End

• Middle

• None

Depreciation is to be calculated from the date when

• Asset is put to use

• Purchase order is made

• Asset is received at business premises

• Invoice of assets is received

If the rate of depreciation is same, then the amount of depreciation under straight line method vis-a-vis written down value method will be

• Equal in all years

• Equal in the first year but higher in subsequent years

• Equal in the first year but lower in subsequent years

• Lower in the first year but equal in subsequent years