depreciation (accounts)

What does depreciation mean?

• An increase in the value of an asset over time.

• A reduction in the value of an asset due to wear and tear or obsolescence.

• The total cost of acquiring an asset.

• The method of valuing inventory at market price.

Which method of depreciation allocates an equal amount of depreciation expense each year?

• Declining Balance Method

• Sum-of-the-Years'-Digits Method

• Straight-Line Method

• Units of Production Method

Diminishing Value method means

• The rate of depreciation falls year by year.

• The amount on which depreciation is calculated falls year by year.

• The rate as well as the amount to which it is applied fall year by year.

• The amount on which depreciation is provided remains same every year.

Depreciation arises because of

• Wear and Tear

• Inflation

• Fall in the value of the asset.

• None of these

The amount of Depreciation charged on machinery is debited to

• Depreciation Account

• Machinery Account

• Provision of Depreciation Account

• None of these

Which one is not the cause of depreciation?

• Efflux of time

• Obsolescence

• Price fluctuation

• Natural Wear and Tear

Depreciation is a process of

• Valuation of asset

• Allocation of cost of asset

• Both Valuation of asset and allocation of cost

• allocation of expense

Depreciation is a

• Reserve

• Provision

• Both (a) & (b)

• None of these

Depreciation is

• Revenue Expenditure

• Capital Expenditure

• Deferred Revenue Expenditure

• None of these

One of the accounting concept for providing depreciation is

• Historical Cost Concept

• Going Concern Concept

• Consistency Concept

• Accrual Concept