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AP Intermediate 1st Year Financial Statements of Sole Proprietorship — practice questions

Explore 50 free Financial Statements of Sole Proprietorship questions in AP Intermediate 1st Year Accountancy. Open each question or exercise to read its content, reference answers and available explanation.

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Financial Statements of Sole Proprietorship questions and exercises with answers

Showing questions 1–30 of 50.

Depreciation is the gradual and permanent decrease in the value of a ___ asset due to use and passage of time:Read the answer and worked solution →Under the straight line method, the amount of depreciation charged each year:Read the answer and worked solution →Under the written down value (diminishing balance) method, depreciation is charged on the:Read the answer and worked solution →The estimated residual value of an asset at the end of its useful life is called its:Read the answer and worked solution →The decline in the value of natural resources such as mines and oil wells is specifically called:Read the answer and worked solution →The writing off of the cost of intangible assets such as goodwill and patents is called:Read the answer and worked solution →A fall in the value of an asset because it becomes out-of-date due to new technology is called:Read the answer and worked solution →An amount set aside out of profits to meet a known liability of uncertain amount is a:Read the answer and worked solution →An amount set aside out of profits to strengthen the financial position of a business is a:Read the answer and worked solution →Creating a provision for depreciation has the effect of ___ the net profit of the business:Read the answer and worked solution →A reserve created for a specific purpose, such as a dividend equalisation reserve, is a:Read the answer and worked solution →Charging depreciation is necessary mainly to:Read the answer and worked solution →Under the straight line method, annual depreciation equals (cost − scrap value) divided by the:Read the answer and worked solution →A trial balance is a statement that lists the ___ balances of all ledger accounts on a particular date:Read the answer and worked solution →The primary purpose of preparing a trial balance is to check the ___ of the ledger postings:Read the answer and worked solution →In a trial balance, the total of the debit column should be:Read the answer and worked solution →Completely failing to record a transaction in the books is an:Read the answer and worked solution →Recording a transaction in the wrong account or with a wrong amount is an:Read the answer and worked solution →Treating a capital expenditure as a revenue expenditure is an:Read the answer and worked solution →Two or more errors that cancel out each other's effect on the trial balance are called:Read the answer and worked solution →A temporary account opened to make a trial balance agree until errors are found is the:Read the answer and worked solution →Errors that do not affect the agreement of the trial balance include:Read the answer and worked solution →Assets and expenses normally appear in the trial balance as ___ balances:Read the answer and worked solution →Liabilities, capital and incomes normally appear in the trial balance as ___ balances:Read the answer and worked solution →The process of correcting accounting errors in the books is called:Read the answer and worked solution →If the trial balance does not tally, the difference is temporarily placed in the:Read the answer and worked solution →Debit or credit balance?Read the answer and worked solution →Order the trial balance stepsRead the answer and worked solution →Match the trial balance termRead the answer and worked solution →True or false about the trial balanceRead the answer and worked solution →

Worked practice questions

Depreciation is the gradual and permanent decrease in the value of a ___ asset due to use and passage of time:

  1. fixed (tangible)
  2. fictitious
  3. liquid
  4. current
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Correct answer: A. fixed (tangible)

Depreciation is the permanent fall in the value of a fixed (tangible) asset from use and time.

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Under the straight line method, the amount of depreciation charged each year:

  1. varies with output randomly
  2. remains constant
  3. increases every year
  4. decreases every year
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Correct answer: B. remains constant

Straight line method charges a constant amount each year.

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Under the written down value (diminishing balance) method, depreciation is charged on the:

  1. original cost every year
  2. book value at the beginning of each year
  3. scrap value
  4. market price
Show answer and solution

Correct answer: B. book value at the beginning of each year

WDV method charges depreciation on the opening book value, so it falls each year.

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More Accountancy topics

Introduction to Accounting & Recording TransactionsTrial Balance and Rectification of Errors