Deprication and Fixed Assets

1)
What is depreciation?
A) Cost of a fixed asset
B) Cost of a fixed asset’s repair
C) The residual value of a fixed asset
D) Portion of a fixed asset’s cost consumed during the current accounting period
2)
Under which depreciation method the amount of depreciation expenses remains same throughout the
useful life of a fixed asset
A) Straight line method
B) Reducing balance method
C) Number of units produced method
D) Machine hours method
3)
A company purchased a vehicle for $6000. I will be used for 5 years and its residual value is expected to
be $1000. What is the annual amount of deprecation using straight line method of depreciation?
A) $1000
B) $2000
C) $3000
D) $3300
4)
What is the accumulated deprecation?
A) Sum of all depreciation expenses of a fixed asset
B) Depreciation expenses
C) Cost of depletion of assets
D) Future value of fixed asset
5)
Which of the following is the normal balance of an accumulated depreciation account?

A) Debit balance
B) Credit balance
C) Nil balance
6)
How trial balance shows the accumulated depreciation?
A) as a debit item
B) as a credit item
C) It doesn’t show
7)
Which of the following is a double entry for depreciation expenses?
A) Accumulated depreciation debit and depreciation expenses Credit
B) Depreciation expenses Debit and accumulated depreciation Credit
C) Cash Debit and depreciation expenses Credit
D) Depreciation expenses Debit and cash Credit
8)
An alternative term used for accumulated depreciation expenses?
A) Provision for depreciation
B) Cumulative depreciation
C) Targeted depreciation
D) Depletion
9)
Which of the following is/are a kind of depreciation expenses?
A) Amortization
B) Depletion
C) Both of them
10)
A fixed asset was bought for $5000. Its accumulated depreciation is $3000 and rate of depreciation is
20%. Calculate its depreciation expenses for the current accounting period using reducing balance
method?
A) $600
B) $2000
C) $300
D) $400
- See more at: http://www.accounting-world.com/2012/09/fixed-assets-and-depreciation-
mcqs.html#sthash.7gY9tNMf.dpuf11)
In depreciation calculation, the useful life of a fixed asset is:
A) a certain figure
B) an estimate
C) a predetermined figure for all fixed assets
12)
Depreciable amount + Residual value of a fixed asset =?
A) Depreciation expenses
B) Accumulated depreciation
C) Cost of the fixed asset
D) Future economic benefits of a fixed asset
13)
Cost of a fixed asset – Accumulated depreciation expenses of the fixed asset=?
A) Book value of a fixed asset
B) Market value of a fixed asset
C) Historical cost of a fixed asset
D) Recoverable amount of a fixed asset
14)
The estimate about useful life of a fixed asset:
A) Can never be changed
B) Can be changed
15)
Which of the following is the correct formula for calculating depreciation using service hours method?
A) Depreciation=(Cost - Scrape value) / Total hours X Actual hours
B) Depreciation=(Cost - Accumulated depreciation) / Total hours X Actual hours
C) Depreciation=(Cost - Accumulated depreciation) / Total hours X Total hours
D) Depreciation=(Cost - Scrape value) / Actual hours X Total hours
16)
The purchase price of a software that will be used for more than 12 months should be regarded as:
A) a revenue expenditure
B) a capital expenditure
C) a long term expense
D) an accounting period expense
17)
XYZ firm has imported a machine from abroad. Which of the following is NOT the element of machine’s
cost?
A) Purchase price of machine
B) Import duty
C) Demurrage charges
D) Refundable tax
18)
A company purchased a new machine for $500,000 and machine’s test run was started to make sure that
machine works properly. There was expense of $5000 incurred on test run, however the sale proceeds of
test production were $2000. You are required to find out the total cost of machine?
A) $500,000
B) $505,000
C) 503,000
D) 495,000
19)
Which of the following fixed assets is not depreciated in the ordinary circumstances?
A) Plant and machinery
B) Building
C) Land
D) Equipments
20)
In the calculation of depreciation, all of the following items are actually estimates except:
A) Useful life
B) Residual value
C) Historical cost
D) Salvage value

mcqs_11.html#sthash.5JiRbslX.dpuf21)
Which of the following accounting concepts or principles require the calculation of depreciation of the
fixed assets?
A) Prudence concept
B) Accrual concept
C) Consistency concept
D) Matching concept
22)
A car was purchased for $5500. Its residual value was estimated to be $500 while its monthly
depreciation expenses are $100 using straight line method. Which of the following is the annual rate of
depreciation?
A) 20%
B) 24%
C) 2%
D) 25%
23)
Under which method of depreciation the amount of depreciation expenses remains constant throughout
the useful life of a fixed asset
A) Reducing balance method

B) Unit of activity method
C) Straight line method
D) None of these
24)
An increase in the value of fixed asset is referred to as:
A) Depreciation
B) Appreciation
C) Market capitalization
D) Reverse depreciation
25)
A fixed asset having book value of $2000 was sold for $1500. Which of the following is the gain or loss on
the sale of fixed asset?
A) $500 gain
B) $1500 loss
C) $500 loss
D) $1000 gain
26)
Book value of a fixed asset equals to market value or sale proceeds of a fixed asset if:
A) Gain on sale=0
B) Loss on sale=0
C) Gain or loss on sale=0
D) Gain > loss on sale
27)
The term ______ is generally used for the depreciation of natural resources
A) Amortization
B) Depletion
C) Appreciation
D) Disposal value
28)
Which of the following is a biological asset?
A) Land
B) Building
C) Environment
D) Living plants and animals
29)
Items of property, plant and equipment can be recognized as assets when their cost can be measured
reliably and it is likely that the future economic benefits associated with the assets:
A) Will increase gradually
B) Will diminish with the passage of time
C) will flow to the entity
D) won’t be available
30)
Under the revaluation model of fixed assets provided by the international accounting standards, the
revaluation of the fixed assets should be carried out:
A) After 10 years
B) on a regular basis
C) Once in 5 years
D) None of them

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1)

A) Cost of a fixed asset

B) Cost of a fixed asset’s repair

C) The residual value of a fixed asset

A) Straight line method

B) Reducing balance method

C) Number of units produced method

D) Machine hours method

What is the accumulated deprecation?

A) Sum of all depreciation expenses of a fixed asset

C) Cost of depletion of assets

D) Future value of fixed asset

Which of the following is the normal balance of an accumulated depreciation account?

How trial balance shows the accumulated depreciation?

A) as a debit item

B) as a credit item

C) It doesn’t show

Which of the following is a double entry for depreciation expenses?

A) Accumulated depreciation debit and depreciation expenses Credit

B) Depreciation expenses Debit and accumulated depreciation Credit

C) Cash Debit and depreciation expenses Credit

D) Depreciation expenses Debit and cash Credit

An alternative term used for accumulated depreciation expenses?

A) Provision for depreciation

Which of the following is/are a kind of depreciation expenses?

In depreciation calculation, the useful life of a fixed asset is:

A) a certain figure

C) a predetermined figure for all fixed assets

Depreciable amount + Residual value of a fixed asset =?

C) Cost of the fixed asset

D) Future economic benefits of a fixed asset

Cost of a fixed asset – Accumulated depreciation expenses of the fixed asset=?

A) Book value of a fixed asset

B) Market value of a fixed asset

C) Historical cost of a fixed asset

D) Recoverable amount of a fixed asset

The estimate about useful life of a fixed asset:

A) Can never be changed

A) Depreciation=(Cost - Scrape value) / Total hours X Actual hours

B) Depreciation=(Cost - Accumulated depreciation) / Total hours X Actual hours

C) Depreciation=(Cost - Accumulated depreciation) / Total hours X Total hours

D) Depreciation=(Cost - Scrape value) / Actual hours X Total hours

A) a revenue expenditure

B) a capital expenditure

C) a long term expense

D) an accounting period expense

A) Purchase price of machine

- See more at: http://www.accounting-world.com/2012/09/fixed-assets-and-depreciation-

A) Reducing balance method

C) Straight line method

An increase in the value of fixed asset is referred to as:

C) Gain or loss on sale=0

D) Gain > loss on sale

Which of the following is a biological asset?

D) Living plants and animals

A) Will increase gradually

B) Will diminish with the passage of time

C) will flow to the entity

B) on a regular basis