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- 1. Multiple Choice
What is depreciation?
Total Sum of Fixed Assets
Total Sum of Liabilities
Cost of Fixed Assets Consumed
Cost of Sale of Fixed Asset
- 2. Multiple Choice
What is a reason for depreciation to occur?
Depletion
Painting
New Purchase
Expensive
- 3. Multiple Choice
Which of the below are reasons why depreciation occurs?
1. Wear & Tear
2. Frequency
3. Obsolescence
1
2
2 & 3
1 & 3
- 4. Multiple Choice
Why does businesses need to show depreciation?
To make provision for replacement of asset
To adjust the revenues
To balance the trial balance
For better use of fixed asset
- 5. Multiple Choice
Equation to calculate depreciation on straight line method is:
Total fixed asset + Scrap Value
[ Cost – Scrap Value ] / Estimated life (Years)
[ Current Asset + Fixed Asset ] * Rate
Total fixed asset + Scrap Value
- 6. Multiple Choice
Equation to calculate depreciation on reducing balance method is:
Total fixed asset + Scrap Value
[ Cost – Scrap Value ] / Estimated life (Years)
[ Current Asset + Fixed Asset ] * Rate
[Cost – Previous Year Depreciation ] * Rate
- 7. Multiple Choice
Equation to calculate depreciation on revaluation method is:
Balance b/d + Purchases – Disposal Book Value – Closing Balance
[ Cost – Scrap Value ] / Estimated life (Years)
[ Current Asset + Fixed Asset ] * Rate
[Cost – Previous Year Depreciation ] * Rate
- 8. Multiple Choice
What is the credit journal entry to transfer asset to disposal account
Debit: Asset Disposal
Credit:.................................
Asset
Depreciation
Balance b/d
Scrap Value
- 9. Multiple Choice
A camera with a value of $20,000 has a life expectancy of 20 years. What is the amount for depreciation shown on income statement using the straight-line depreciation method if the scrap value of the camera is $2000?
$900
$18,000
$19,100
$2,900
- 10. Multiple Choice
A printer worth $30,000 is depreciated at a rate of 5% using reducing balance method. What is the depreciation taken on balance sheet for the 2nd year using the reducing balance depreciation method?
$1,500
$27,075
$1,425
$28,500
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