11th Accountancy Monthly Test - 1 ( Depreciation Accounting )

MABS Institution

11th Accountancy Monthly Test - 1 ( Depreciation Accounting )-Aug 2020

Time : 2.30 Hours

Part - A

Multiple Choice Question - Answer All Question

The older name of Straight line method is ________.

Annuity method
Revaluation method
Fixed Installment method
None

In the accounting records, the fixed assets are normally recorded __________.

At Cost
At Book Value
At Scrap Value
At replacement value

Depreciation on fixed assets is__________expenditure.

Revenue Expenditure
Capital Expenditure
Deferred Revenue expenditure
None

__________ means the amount incurred in acquiring the asset.

Original cost of the asset
Scrap value of an asset
Estimated useful life of the asset
None of these

A trader followed WDV method of depreciation; the book value of assets after 4 years is 24% of original cost. Find rate of depreciation__________.

The book value of machinery on 01.04.2016 was Rs. 70, 000. Depreciation is charged at I0% p.a under Written Down value method on 31st March every year. The machine was sold for Rs. 50, 000 on 01.8.2017; calculate the Profit/Loss on sale of machinery.

Profit Rs. 5,755
Profit Rs. 5,000
Profit Rs.10,375
Loss Rs. 10,325

Under the written down value method of depreciation, the amount of depreciation is

Uniform in all the years
Decreasing every year
Increasing every year
None of the above

Under which of the following methods the value of Assets may be reduced to zero?

Depletion method
Revaluation method
Sinking fund method
Straight line method

Depreciation is the process of

Allocation of cost of the asset to the period of its useful life
Valuation of assets
Maintenance of an asset in a state of efficiency
Adding value to the asset

Residual value of an asset means the amount that it can fetch on sale at the ____________of its useful life

Beginning
End
Middle
None

Part - B

Generic 2 - Answer All Question

On 1.1.2017 a firm purchased a machine at a cost of Rs.1,00,000. Its life was estimated to be 10 years with a scrap value of Rs.10,000. Compute the amount of depreciation to be charged at the end of each year.

Depreciation is a non-cash expense which should not be provided for in the profit and loss account comment.

An asset was purchased for Rs 1,00,000. The rate of depreciation is 10% per annum. Calculate the annual depreciation for the first two years under the diminishing balance method .
State R.N. Carter's definition of depreciation.

Calculate the reate of depreciation under straight line method.

Particulars Rs

Purchase price of a Machine 80,000

Installation charges 20,000

Estimated scrap value 40,000

Expected useful life 4 years

Particulars	Rs
Purchase price of a Machine	80,000
Installation charges	20,000
Estimated scrap value	40,000
Expected useful life	4 years

Abdul purchased a Machinery on 1^st April for 2,00,000. After' having used it for three years it was sold for 1,60,000. Depreciation is to be provided at the rate of 10% on diminishing Balance method. Accounts are closed on' 31^st March of every year. Find out the Profit or ·Loss on sale of Machinery.

What is meant by depreciation?

A company purchased a land in an urban area. It does not provide any depredation on the purchased land at the end of the year. It the company correct in doing so?

A boiler was purchased on 1st January 2015 from abroad for Rs 10,000. Shipping and forwarding charges amounted to Rs 2,000. Import duty Rs 7,000 and expenses of installation amounted to Rs 1,000. Calculate depreciation for the first 3 years @10% p.a. on diminishing balance method assuming that the accounts are closed 31st December each year.

Calculate the amount of depreciation and depreciation rate from the following by using ‘straight line method’. Also give journal entries for the first two years. The books are closed on 31st December every year.

January 1, 2016 Payment to vendor for purchase of machinery Rs.1,00,000

January 1, 2016 Transportation cost Rs.1,000

January 1, 2016 Installation cost Rs.9,000

Estimated scrap value at the end of the life Rs.5,000

Estimated life 10years

Part - C

Generic 3 - Answer All Question

A Motor car was purchased on 1st January, 2013 for Rs 25,000, depreciated at 10% on diminishing balance method. It was ,sold for Rs 16,500 on 3^st December, 2015, Prepare motor car· account. The accounts are closed on 31^st December every year.

State the advantages and limitations of straight line method of depreciation.

Joy and Co. purchased machinery on 1st April 2016 for Rs.75,000. On 31st March 2018, it sold the machinery for Rs.62,000. Depreciation is to be provided every year at 10% per annum on the fixed instalment method. Accounts are closed on 31st March every year. Find out the profit or loss on sale of machinery.

What are the Factors determining the amount of depreciation?

Write a note on sum of years of digits method.
Sunil & company purchased a fixed asset on 1.4.2002 for Rs 5,00,000. Depreciation is to be provided @ 15% per annum according to straight line method. The books are closed on 31st March every year. Prepare fixed asset account and depreciation account for three years.

Distinguish between straight line method and written down value method of providing depreciation.

Write a short note on - Revaluation Method :

A furniture costing Rs 5,000 has been purchased on 1.1;2011,the installation charges being Rs 1,000. The furniture is to be depreciated @10% p.a on the diminishing balance method. Show the furniture account and depreciation account for the first three years.

What is Depletion method?

Part - D

Generic 5 - Answer All Question

A company purchased machinery on 1.4.2012 for Rs 50,000.Depreciation is 10%. Aecounts are closed on 31^st March every year. Prepare machinery account and depreciation account under straight line method and also under written down value method

Ramu Brothers purchased a machine on 1st July 2016 at a cost of Rs.14,000 and spent Rs.1,000 on its installation. The firm writes off depreciation at 10% of original cost every year. The books are closed on 31st December every year. Give journal entries and prepare machinery account and depreciation account for 2 years

A manufacturing company purchased on 1 April, 2010, a plant and machinery for Rs 4,50,000 and spent Rs 50,000 on its installation. After having used it for three years, it was sold for Rs 3,85,000. Depreciation is to be provided every year at the rate of 15% per annum on the fixed instalment method. Accounts are closed on 31st March every year. Calculate profit or loss on sale of machinery.

On 1st January 2015, a second hand machine was purchased for Rs 58,000 and Rs 2,000 was spent on its repairs. On 1st July 2017, it was sold for Rs 28,600. Prepare the machinery account for the years 2011 to 2013 under written down value method by assuming the rate of depreciation as 10% p.a. and the accounts are closed on 31st December every year.

A company purchased machinery costing Rs 90,000 on January 1, 2015 and spent Rs 10,000 on its erection. On July 1, 2017, the machinery was sold for Rs 58,000. The company writes off depreciation at 20% p.a. underwritten down value method. Prepare machinery account. The books are closed on 31st December every year.
Michel & Co., purchased a Second hand Plant for Rs 4,70,000 on 1^stJuly 2001. They spent Rs30,000 on the repairs and installed the Plant. Depreciation is written off at 10% p.a. on the Straight line method. On 30^th September 2003, the Plant was found to be unsuitable and sole for Rs 3,50,000.
Prepare Plant account and Depreciation account for three years assuming that the accounts are closed on 31^st March.every year.

Raj & Co purchased a machine on 1st January 2014 for Rs 90,000. On 1st July 2014, they purchased another machine for Rs 60,000. On 1st January 2015, they sold the machine purchased on 1st January 2014 for Rs 40,000. It was decided that the machine be depreciated at 10% per annum on diminishing balance method. Accounts are closed on 31st December every year. Show the machinery account for the years 2014 and 2015.

From the following particulars, give journal entries for 2 years and prepare machinery account under straight line method of providing depreciation:
Machinery was purchased on 1.1.2016
Price of the machine Rs 36,000
Freight charges Rs 2,500
Installation charges Rs 1,500
Life of the machine 5 years

M/s Ramco textile mills purchased machinery on 1st April 2014 for Rs.2,00,000 on credit from M/s. Nila & Co. and spent Rs.10,000 on its installation. Depreciation is provided at 10% per annum on the written down value method. Prepare machinery account and depreciation account for the first three years. Books are closed on 31st March every year.

Ragul purchased machinery on April 1, 2014 for Rs 2,00,000. On 1st October 2015, a new machine costing Rs 1,20,000 was purchased. On 30th September 2016, the machinery purchased on April 1, 2014 was sold for Rs 1,20,000. Books of accounts are closed on 31st March and depreciation is to be provided at 10% p.a. on straight line method. Prepare machinery account and depreciation account for the years 2014-15 to 2016-17:

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January 1, 2016 Payment to vendor for purchase of machinery	Rs.1,00,000
January 1, 2016 Transportation cost	Rs.1,000
January 1, 2016 Installation cost	Rs.9,000
Estimated scrap value at the end of the life	Rs.5,000
Estimated life	10years

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11th Accountancy Monthly Test - 1 ( Depreciation Accounting )

MABS Institution

11th Accountancy Monthly Test - 1 ( Depreciation Accounting )-Aug 2020

Part - A

Multiple Choice Question - Answer All Question

The older name of Straight line method is ________.

In the accounting records, the fixed assets are normally recorded __________.

Depreciation on fixed assets is__________expenditure.

__________ means the amount incurred in acquiring the asset.

A trader followed WDV method of depreciation; the book value of assets after 4 years is 24% of original cost. Find rate of depreciation__________.

The book value of machinery on 01.04.2016 was Rs. 70, 000. Depreciation is charged at I0% p.a under Written Down value method on 31st March every year. The machine was sold for Rs. 50, 000 on 01.8.2017; calculate the Profit/Loss on sale of machinery.

Under the written down value method of depreciation, the amount of depreciation is

Under which of the following methods the value of Assets may be reduced to zero?

Depreciation is the process of

Residual value of an asset means the amount that it can fetch on sale at the ____________of its useful life

Part - B

Generic 2 - Answer All Question

On 1.1.2017 a firm purchased a machine at a cost of Rs.1,00,000. Its life was estimated to be 10 years with a scrap value of Rs.10,000. Compute the amount of depreciation to be charged at the end of each year.

Depreciation is a non-cash expense which should not be provided for in the profit and loss account comment.

An asset was purchased for Rs 1,00,000. The rate of depreciation is 10% per annum. Calculate the annual depreciation for the first two years under the diminishing balance method .

State R.N. Carter's definition of depreciation.

Calculate the reate of depreciation under straight line method. Particulars Rs Purchase price of a Machine 80,000 Installation charges 20,000 Estimated scrap value 40,000 Expected useful life 4 years

What is meant by depreciation?

A company purchased a land in an urban area. It does not provide any depredation on the purchased land at the end of the year. It the company correct in doing so?

Part - C

Generic 3 - Answer All Question

A Motor car was purchased on 1st January, 2013 for Rs 25,000, depreciated at 10% on diminishing balance method. It was ,sold for Rs 16,500 on 3st December, 2015, Prepare motor car· account. The accounts are closed on 31st December every year.

State the advantages and limitations of straight line method of depreciation.

What are the Factors determining the amount of depreciation?

Write a note on sum of years of digits method.

Sunil & company purchased a fixed asset on 1.4.2002 for Rs 5,00,000. Depreciation is to be provided @ 15% per annum according to straight line method. The books are closed on 31st March every year. Prepare fixed asset account and depreciation account for three years.

Distinguish between straight line method and written down value method of providing depreciation.

Write a short note on - Revaluation Method :

A furniture costing Rs 5,000 has been purchased on 1.1;2011,the installation charges being Rs 1,000. The furniture is to be depreciated @10% p.a on the diminishing balance method. Show the furniture account and depreciation account for the first three years.

What is Depletion method?

Part - D

Generic 5 - Answer All Question

A company purchased machinery on 1.4.2012 for Rs 50,000.Depreciation is 10%. Aecounts are closed on 31st March every year. Prepare machinery account and depreciation account under straight line method and also under written down value method

From the following particulars, give journal entries for 2 years and prepare machinery account under straight line method of providing depreciation: Machinery was purchased on 1.1.2016 Price of the machine Rs 36,000 Freight charges Rs 2,500 Installation charges Rs 1,500 Life of the machine 5 years

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Calculate the reate of depreciation under straight line method.

Particulars Rs

Purchase price of a Machine 80,000

Installation charges 20,000

Estimated scrap value 40,000

Expected useful life 4 years

A Motor car was purchased on 1st January, 2013 for Rs 25,000, depreciated at 10% on diminishing balance method. It was ,sold for Rs 16,500 on 3^st December, 2015, Prepare motor car· account. The accounts are closed on 31^st December every year.

A company purchased machinery on 1.4.2012 for Rs 50,000.Depreciation is 10%. Aecounts are closed on 31^st March every year. Prepare machinery account and depreciation account under straight line method and also under written down value method

From the following particulars, give journal entries for 2 years and prepare machinery account under straight line method of providing depreciation:
Machinery was purchased on 1.1.2016
Price of the machine Rs 36,000
Freight charges Rs 2,500
Installation charges Rs 1,500
Life of the machine 5 years