MCQ Questions Chapter 7 Depreciation Provisions and Reserves Class 11 Accountancy

Please refer to MCQ Questions Chapter 7 Depreciation Provisions and Reserves Class 11 Accountancy with answers provided below. These multiple-choice questions have been developed based on the latest NCERT book for class 11 Accountancy issued for the current academic year. We have provided MCQ Questions for Class 11 Accountancy for all chapters on our website. Students should learn the objective based questions for Chapter 7 Depreciation Provisions and Reserves in Class 11 Accountancy provided below to get more marks in exams.

Chapter 7 Depreciation Provisions and Reserves MCQ Questions

Please refer to the following Chapter 7 Depreciation Provisions and Reserves MCQ Questions Class 11 Accountancy with solutions for all important topics in the chapter.

MCQ Questions Answers for Chapter 7 Depreciation Provisions and Reserves Class 11 Accountancy

Question. Diminishing Value Method means a method by which
a. The rate of depreciation falls year to year
b. The amount on which depreciation is calculated falls year to year.
c. The Rate as well as the amount to which it is applied falls year by year
d. None of the above 

Question. Which of the following is of Capital nature?
a. Freight inward
b. Cost of building
c. Repair done on asset
d. Tax paid

Question. Which among the following, provision is created to provide for expected repairs and renewal of fixed assets?
a. Revaluation Reserve
b. Provision For Depreciation
c. Provision for Repairs and Renewals

Question. Provision for Bad debt is created to
a. To cover the loss
b. To Cover the Debt
c. To cover the profit

Question. If the amount of any known liability can be determined with accuracy:
a. A liability should be provided
b. A reserve should be set aside
c. A provision should be created

Question. Which of the following tangible fixed asset cannot be depreciated
a. Building
b. Vehicle
c. Plant
d. Land 

Question. In which of the following methods, the cost of the asset is not spread over in equal proportion during its useful economic life?
a. Original Cost Method
b. Written Down Value Method
c. Both a. and b.
d. None of these

Question. On April 1, 2016, a machinery was purchased for Rs.1,00,000. Rate of Depreciation Charged @ 12% p.a. under Straight line method. The book value on May 31,2017 would be
a) Rs. 24,000
b) Rs. 86,000
c) Rs.34,000
d) Rs. 14,000

Question. Which of the following is not considered as a factor affecting amount of depreciation?
a) Rate of Depreciation
b) Depreciable Cost
c) Cost of an Asset
d) Estimated useful life of an asset. 

Question. What is the amount of difference between the closing Balance of 2 machines after 2 years , if both the machine were purchased on the same date and with the same amount i.e., Rs.2,00,000.Machine I is depreciated by 10% p. a. under Straight Line Method and Machine II is depreciated by 10%p.a. on Written Down value Method:
a. Both Value will be equal
b. Value of Machinery II is more by Rs.2,000
c. Value of Machinery I is more by Rs.4,000
d. Value of Machinery II is more by Rs.4,000 

Question. If an asset costing Rs.1,20,000 is depreciated by Straight Line Method @ 10% p.a., it will be zero after
a. 8 years
b. 12 years
c. 10 years
d. 6 years 

Question. Original Cost of an asset is Rs.3,50,000; its salvage value is Rs 25,000; useful life 5 years. Annual Depreciation under Straight Line Method :
a. Rs 65,000
b. Rs85,000
c. Rs.35000
d. Rs.17,500 

Question. Original Cost of an asset is Rs.3,50,000; its salvage value is Rs 25,000; useful life 5 years. Rate of Depreciation under Straight Line Method :
a. 18.57 % p.a.
b. 20 % p.a.
c. 15 % p.a.
d. 17 % p.a. 

Question. Book Value of an asset after 2 years is Rs.80,000; Rate of depreciation is 10% p.a. under Straight Line method. The Original Cost Of an asset would be
a. Rs.8,000
b. Rs. 1,00,000
c. Rs.8,00,000
d. Rs.80,000 

Question. Dividend equalisation reserve is
a. Specific Reserve
b. General Reserve
c. Revenue Reserve 

Question. To strengthening the financial position of the business, the following reserve is created
a. Revenue Reserve
b. Revaluation reserve
c. Specific Reserve

Question. Which of the following is not true with regard to the fixed assets?
a. they are not meant to resale to earn profit
b. they are acquired for use over a long period of time
c. they always give profit on sale
d. depreciation at specified rates to be charged on most of the fixed asset

Question. Amortisation refers to writing off
a. Depleting Asset
b. Wasting asset
c. Intangible Asset
d. Fictitious asset

Question. Depreciation is a
a. Reserve
b. Provision
c. Both a. and b.
d. None of these

Question. Which of the following statement is true?
a. Depreciation is a charge against profit.
b. Depreciation is an appropriation to profit
c. Depreciation is provided only if there is a profit.
d. In case of loss, depreciation should not be charged. 

Question. Which of the following expenses is not included in the acquisition cost of a plant and equipment?
a. Cost of site preparation
b. Repairs
c. Installation Cost
d. Freight and transportation charges

Question. An asset was purchased for Rs. 1,00,000 and as per Reducing Balance Method, 10 % depreciation is charged every year. What is the value of asset at the end of 4 years.
a. Rs.65,610
b. Rs. 65,680
c. Rs.75,610
d. Rs.75,630 

Question. In the books of Vandana Ltd. the machinery account shows a debit balance of Rs.48,000 as on April 1,2013.the original cost of which was Rs.75,000. The Machinery was sold on September 30, 2015 for Rs.42,000. The company charges depreciation @20% p.a. on Straight line Method. The depreciation for 2013-2014 is
a. Rs. 15,000
b. Rs. 9,600
c. Rs. 4,800
d. Rs.7,500

Question. The value of machinery as on April1, 2018 is Rs. 64,000 which was purchased on April 1, 2016 for Rs.1,00,000 was sold on October1, 2018 and depreciation charged thereon @ 20% p.a. under Written Down Value Method. The total Depreciation Provided on the Machinery Sold is
a. Rs. 42,300
b. Rs.42,400
c. Rs. 42,000
d. Rs.42,600 

Question. The balance of Fixed Assets account is always :
a. Debit balance
b. Credit Balance
c. Both a. and b. 

Question. Depreciation appears in the:
a. Profit and loss account
b. Trading account
c. Profit and loss Appropriation account

Question. This charge is used in case of exhaustion of wasting asset
a. Depreciation
b. Amortisation
c. Depletion

Question. DRR is created to provide funds for
a. Redemption of debentures
b. for meeting unknown liabilities
c. for creating revenue reserves

Question. Depreciation is Provided on:
a. Current assets
b. Fictitious asset
c. Intangible Asset
d. Fixed Asset

Question. Depreciation is calculated from the date of:
a. Purchase of an asset
b. Receipt of an asset at business premises
c. Asset put to use
d. Asset installed

Question. The balance of Machinery Account as on March 31, 2018 is Rs.1,08,000. The machinery was purchased on April 1, 2017. Depreciation is charged @10% p.a. by Diminishing Balance Method. What is the original cost of an asset purchased on April1, 2017.
a. Rs. 1,30,000
b. Rs.1,25,000
c. Rs. 1,20,000

Question. The book value of machinery on the date of sale is Rs. 45000. The original price of it was Rs. 85,000. The company sold it at a loss of Rs.7,000. What is the sale proceed?
a. Rs.92,000
b. Rs.78,000
c. Rs.52,000
d. Rs. 38,000 

Question. The book value of machinery on the date of sale is Rs. 45000. The original price of it was Rs. 85,000. The company sold it at a profit of Rs.7,000. What is the sale proceed?
a. Rs.92,000
b. Rs.78,000
c. Rs.52,000
d. Rs. 38,000

Question. The Written Down Value of an asset after 3 years of depreciation on Reducing Balance Method @20% p.a. is Rs.64,000. Its original cost is:
a. Rs.1,25,000
b. Rs.1,26,000
c. Rs. 80,000 

Question. The loss on sale of asset is debited to
a. Reserves
b. Depreciation fund
c. Profit and Loss Account
d. None of the Above.

Question. An asset was purchased for Rs.2,50,000 and as per Reducing Balance Method , 20 % p.a. depreciation is charged . What is the value of Asset at the end of three years
a. Rs.1,28,000
b. Rs.1,54,000
c. Rs. 1,23,000
d. Rs. 1,00,000 

Question. Which Method is not recognised by Income Tax Authority
a. Written down value Method
b. Diminishing Balance Method
c. Fixed Installment Method
d. All of the above 

Question. Book value is the basis of charging Depreciation under Which method.
a. Written down value Method
b. Straight line Method
c. Fixed Installment Method
d. All of the above

Question. Reserves Created for a particular purpose are known as
a. General Reserve
b. Secret Reserve
c. Specific Reserve
d. Capital Reserve

Question. For creating a provision for doubtful debt, Profit and Loss account is to be:
a. Debited
b. Credited
c. None of the above 

Question. Name the method of Depreciation which assumes that the asset is depreciated more in the earlier year and less in the later year of its life.
a. Straight Line Method
b. Written Down Method
c. Both a. and b.
d. None of these

Question. Capital Redemption Reserve is:
a. General Reserve
b. Specific reserve
c. Revenue Reserve

Question. Provision is created to meet for:
a. Known liability
b. Known Asset
c. Known Amount. 

Question. It is shown under the heading of Reserve &Surplus on the liability side of the Balance sheet:
a. Short term Loan
b. General Reserve
c. Provision for Repairs 

Question. Creating Reserve is important because it helps in
a. Meeting the future contingencies
b. Strengthening the Financial position of the business
c. Both a. and b
d. None of these 

Question. Which among the following is a correct difference between Provision and reserve?
a. Provision is created out of legal necessity whereas Reserve is created as a matter of prudence
b. Provision is invested whereas reserve is not invested
c. Provision is an appropriation to profit whereas reserve is a charge against profit
d. Provision can be used as a distribution of dividend whereas a reserve cannot be allowed to be used for distribution of dividend. 

Question. When an Organisation Follows Written Down value Method , in the Balance sheet the asset will be represented at
a. Net Book Value
b. Historical cost
c. Cost or market price, whichever is less

Question. Charging Depreciation is
a. Compulsory
b. Voluntary
c. Depending upon the condition of an asset
d. None of the above

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