CA CPT - Basics of Accounting - Depreciation

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Question - 1

Obsolescence of a depreciable asset is caused by -
I Technological changes
II Improvement in production method
III Change in market demand for the product or Service Output
IV Legal or other restrictions

  • A Only (I) above
  • B Both (I) and (II) above
  • C All (I), (II), (III) and (IV) above
  • D Only (IV) above

Question - 2

The number of production or similar units expected to be obtained from the use of an asset by an enterprise is called as -

  • A Unit life
  • B Useful life
  • C Production life
  • D Expected life

Question - 3

Which of the following is not true with regard to Fixed Assets?

  • A They are acquired for using them in the conduct of business operations
  • B They are not meant for resale to earn profitThey can easily be converted into cashThey can easily be converted into cashThey can easily be converted into cash
  • C They can easily be converted into cash
  • D Depreciation at specified rates is to be charged on most of the fixed assets

Question - 4

Fixed assets are held by business for________________

  • A Converting into cash
  • B Generating revenue
  • C Resale
  • D None of the above

Question - 5

Which of the following expenses is not included in the acquisition cost of a plant and equipment?

  • A Cost of site preparation
  • B Delivery and handling charges
  • C Installation costs
  • D Financing costs incurred for the period after plant and equipment is put to use

Question - 6

Depreciation starts on a machine from the date

  • A It is purchased
  • B It is put to use
  • C It is installed
  • D Any of above

Question - 7

Which of the following is Depleted?

  • A Land
  • B Goodwill
  • C Machinery
  • D Coal Mines

Question - 8

Which Schedule prescribes Depreciation rate?

  • A Schedule x
  • B Schedule XII
  • C Schedule XIV
  • D Schedule XV

Question - 9

If a concern proposes to discontinue its business from March 2014 and decides to dispose off all its assets within a period of 4 months, the Balance Sheet as on March 31, 2014 should indicate the assets at their

  • A Historical cost
  • B Net realizable value
  • C Cost less depreciation
  • D Replacement value of assets

Question - 10

In the case of downward revaluation of an asset which is for the first time revalued, the account to be debited is

  • A Fixed Asset
  • B Revaluation Reserve
  • C Profit & Loss account
  • D General Reserve
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