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] |
||||