True Or False Question (With Answers) On Depreciation Of Fixed Assets

November 13th, 2008 Comments off
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Append below the following true or false questions ( with answers) on depreciation: 

 

ACCOUNTING FOR DEPRECIATION AND FIXED ASSETS

True

False

1.

Depreciation is a non-cash item

 

 

2.

Depreciation is calculated generally on the market value of fixed assets

 

 

3.

Depreciation should be provided only where the company can show some profit in a financial year

 

 

4.

Higher depreciation will affect Cash profit of the business

 

 

5.

Depreciation accounting is a process of allocation and not of valuation

 

 

6.

Depreciation is charged on all assets

 

 

7.

Depreciation cannot be provided in case of loss in a financial year

 

 

8.

The company did not provide any depreciation on its factory machinery as its market value is much higher than the cost of purchase

 

 

9.

Providing depreciation ensures sufficient cash for asset replacement

 

 

10.

The expression-depreciation at 10% and 10% per annum carry the same meaning

 

 

11.

The concept of depreciation does not occupies a significant place in the determination of income and in the measurement of service potential of assets

 

 

12.

Fixed assets are stated in the balance sheet at their written down value

 

 

13.

Depreciation charge is necessary to calculate the true cost of production

 

 

14.

Depreciation is an amortized expenditure

 

 

15.

Depreciation should be calculated on market value if it is higher than the cost

 

 

16.

Reducing balance method of depreciation is followed to have a uniform charge for depreciation and repairs and maintenance together

 

 

17.

Revaluation method is the method of depreciation used to depreciate assets like loose tools, crates, steel container,

 

 

18.

When a fixed asset is sold for a loss the amount is transferred to the Profit and Loss account by a credit in disposal of fixed asset account

 

 

19.

Depreciation is the part of the cost of the fixed asset consumed during the period of use by the firm

 

 

20.

The cost of repairs is included in the calculation of depreciation of a fixed asset

 

 

21.

The balance of the Provision for Depreciation Account is shown on the Trial Balance as debit

 

 

22.

In reducing balance method, depreciation rate is applied on the book value of the asset

 

 

23.

Replacement method is a method of depreciation

 

 

24.

Fixed assets are normally recorded in the accounting record at cost

 

 

25.

The proceeds from the sale of a fixed asset would be credited is credited to sales accounts

 

 

26.

The straight line method is the providing of  depreciation  where the amount of depreciation is reduced from year to year

 

 

   

 

[ REFER ANSWER]

   

 

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Financial Accounting

 
 

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