Depreciation MCQs (1-10)

1. How do we describe the process of adjusting the value of an asset by recognizing that it is consumed in a way that does not completely eliminate the resource?

(a) Adjustment

(b) Valuation

(c) Depreciation

(d) Waning

Correct! Wrong!

2. If the estimated amount of depreciation on equipment for a period is Rs. 2,000, the adjusting entry to record depreciation would be?

(a) Debit depreciation expense, Rs. 2,000; credit accumulated depreciation, Rs. 2,000

(b) Debit depreciation expense, Rs. Rs. 2,000; credit cash, Rs. 2,000

(c) Debit equipment, Rs. 2,000; credit depreciation expense, Rs. 2,000

(d) Debit accumulated depreciation, Rs. 2,000; credit depreciation expense, Rs. 2,000

Correct! Wrong!

3. Which one of the following most closely defines 'Amortization'?

(a) The depreciation of tangible fixed assets

(b) The depreciation of intangible fixed assets

(c) The depreciation of current assets

(d) The revaluation of land and buildings

Correct! Wrong!

4. Book value = cost minus _____________?

(a) Current liabilities

(b) Salvage value

(c) Accumulated depreciation

(d) Residual value

Correct! Wrong!

5. What is process called, where costs of the natural resources are allocated over its useful life?

(a) Capitalization

(b) Depletion

(c) Amortization

(d) Depreciation

Correct! Wrong!

6. Depreciation arises due to?

(a) Physical wear and tear of the Asset

(b) Fall in the market value of an Asset

(c) Fall in the value of money

(d) None of these

Correct! Wrong!

7. A machine that cost Rs. 120,000 has accumulated depreciation of Rs. 50,000. The book value of machine is?

(a) Rs. 50,000

(b) Rs. 70,000

(c) Rs. 120,000

(d) Rs. 170,000

Correct! Wrong!

8. What is the process of allocating the cost of intangible assets over its estimated life?

(a) Depreciation

(b) Amortization

(c) Depletion

(d) Trial balance

Correct! Wrong!

9. Which of the following items is not a non-cash item?

(a) Depreciation expense

(b) Amortization expense

(c) Depletion expense

(d) Income tax expense

Correct! Wrong!

10. Depreciable value of an asset is equal to?

(a) Cost + scrap value

(b) Cost + market price

(c) Cost – scrap value

(d) None of the given options

Correct! Wrong!

1. How do we describe the process of adjusting the value of an asset by recognizing that it is consumed in a way that does not completely eliminate the resource?

2. If the estimated amount of depreciation on equipment for a period is Rs. 2,000, the adjusting entry to record depreciation would be?

3. Which one of the following most closely defines 'Amortization'?

4. Book value = cost minus _____________?

5. What is process called, where costs of the natural resources are allocated over its useful life?

6. Depreciation arises due to?

7. A machine that cost Rs. 120,000 has accumulated depreciation of Rs. 50,000. The book value of machine is?

8. What is the process of allocating the cost of intangible assets over its estimated life?

9. Which of the following items is not a non-cash item?

10. Depreciable value of an asset is equal to?

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