CBSE Class 11 (Commerce) Depreciation, Provisions and Reserves — practice questions
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Practice CBSE Class 11 (Commerce) Depreciation, Provisions and Reserves in the app →Depreciation is the gradual and permanent decrease in the value of a ___ asset due to use and passage of time:Under the straight line method, the amount of depreciation charged each year:Under the written down value (diminishing balance) method, depreciation is charged on the:The estimated residual value of an asset at the end of its useful life is called its:The decline in the value of natural resources such as mines and oil wells is specifically called:The writing off of the cost of intangible assets such as goodwill and patents is called:A fall in the value of an asset because it becomes out-of-date due to new technology is called:An amount set aside out of profits to meet a known liability of uncertain amount is a:An amount set aside out of profits to strengthen the financial position of a business is a:Creating a provision for depreciation has the effect of ___ the net profit of the business:A reserve created for a specific purpose, such as a dividend equalisation reserve, is a:Charging depreciation is necessary mainly to:Under the straight line method, annual depreciation equals (cost − scrap value) divided by the:Depreciation is best described as which type of expense?Depreciation in the books is based on which value of the asset?The term depletion is used for which kind of asset?A firm buys a patent for Rs 10,00,000 with a useful life of 10 years. What is the yearly amortisation?A machine becomes outdated because a better model arrives. Which cause of depreciation is this?Patents, copyrights and leases lose value mainly because of which cause?Which cause of depreciation is permanent but not continuing or gradual?Which is a valid reason why depreciation must be charged?If depreciation is not provided, what happens to the balance sheet?From the point of view of income tax, depreciation is treated as what?A firm earns Rs 50,000 before depreciation and tax and charges Rs 10,000 depreciation. Profit before tax?Which three factors does the amount of depreciation basically depend on?A machine costs Rs 50,000 and installation and transport add Rs 5,000. What is its cost for depreciation?Which item is included in the cost of a second hand machine?A machine is expected to sell for Rs 6,000 after 10 years, with Rs 1,000 disposal expenses. Net residual valueA machine costs Rs 50,000 with net residual value Rs 5,000. Its depreciable cost is what?Total depreciation charged over the life of an asset must equal which amount?A machine is in good physical shape after 5 years but cannot produce profitably. Its useful life is what?How does the useful life of an asset normally compare with its physical life?An asset costs Rs 2,50,000, scrap Rs 50,000, life 10 years. Straight line yearly depreciation?For an asset costing Rs 2,50,000 with yearly straight line depreciation of Rs 20,000, what is the rate?A truck costing Rs 8,00,000 has no scrap value and a 10 year life. Straight line rate of depreciation?Which is a stated advantage of the straight line method?What faulty assumption does the straight line method make?Under the straight line method, depreciation plus repairs taken together over the years tends to do what?An asset costing Rs 2,00,000 is depreciated at 10 percent on written down value. Second year charge?An asset costing Rs 2,00,000 is written down at 10 percent a year. Book value after three years?The written down value method is also called which other name?Under which method is the total of depreciation and repairs roughly equal each year?The selected depreciation method should be applied in what manner?When depreciation is charged to the asset account, how does the asset show in the balance sheet?Under the provision for depreciation method, at what value does the asset account stay?What is the purpose of an Asset Disposal Account?In an Asset Disposal Account, the original cost of the asset sold goes to which side?What is credited to the Asset Disposal Account besides the sale proceeds?An addition that becomes an integral part of an existing asset should be depreciated over what period?A provision is best described as which of the following?A reserve is created in which manner?Provision for doubtful debts is created in line with which accounting principle?Debtors from whom collection is certain are called what?Debtors whose money cannot be collected at all are classed as what?Sundry debtors are Rs 68,000 and bad debts of Rs 8,000 are yet to be written off. Provision at 10 percent?Which of these is an example of a provision?A provision is made for what kind of item?Which statement about taxable profit is correct?Which of these may be used to pay dividends?A reserve whose purpose is not specified is called what?Which reserve is built to stabilise the rate of dividend?Which fund is created to meet claims of workers due to accidents?Which reserve provides funds to repay debentures?Revenue reserves are created out of which kind of profits?Which of these is treated as a capital profit?Profit on sale of a fixed asset is treated as what kind of profit?A secret reserve differs from an ordinary reserve because it does what?Charging higher depreciation than required creates which kind of reserve?Which of these can build a secret reserve?Making an excessive provision for doubtful debts may result in what?A reserve may be set up to meet which future need?Which asset type is depreciated under the depreciation rules, in line with AS-6?Which feature must a depreciable asset have?Depreciation of a machine is debited to which statement?