Which of the following statements is true with regard to written down value method of depreciation?
i. The rate at which the asset is written off reduces year after year
ii. The amount of depreciation provided reduces from year to year
iii. The rate of depreciation as well as the amount of depreciation reduce year after year
iv. The value of the asset gets reduced to zero over a period of time

Related Mcqs:

1. A second hand car is purchased for 2,00,000 and sold at 1,40,000 after two years. If depreciation is charged @ 10% on written down value method, find the profit or loss on sale of the Second hand car?

   A. Loss of 20,000
   B. Loss of 22,000
   C. Loss of 11,000
   D. Profit of 11,000

2. Total depreciation of an asset cannot exceed its:

   A. Scrap value
   B. Residual value
   C. Market value
   D. Depreciable value

3. An asset must be _______ by the business to be shown as an asset in its “balance sheet”

   A. Possessed
   B. Owned
   C. Controlled
   D. Used

4. Which of the following statements best describes the purpose of depreciation?

   A. Regular reduction of asset value to correspond to changes in market value as the asset ages
   B. A process of correlating the market value of an asset with its gradual decline in physical efficiency
   C. Allocation of cost in a manner that will ensure that Plant and Equipment items are not carried on the Balance Sheet in excess of net realizable value
   D. Allocation of the cost of an asset to the periods in which services are received from the asset

5. Which of the following statements is correct about Depreciation?

   A. Depreciation cannot be provided in case of loss in a financial year
   B. Depreciation is a charge against profit
   C. Depreciation is provided in the books only when there is profit
   D. Depreciation is an appropriation of profit

6. Which of the following is not a method of charging depreciation?

   A. Straight line Method
   B. Written down value Method
   C. Discounted present value Method
   D. Sum of digits Method

7. Which of the following is true with respect to providing depreciation under diminishing balance method?

   A. The amount of depreciation keeps increasing every year while the rate of depreciation keeps decreasing
   B. The amount of depreciation and the rate of depreciation decrease every year
   C. The amount of depreciation decreases while the rate of depreciation remains the same
   D. The amount of depreciation and the rate of depreciation increases every year

8. A second hand car is purchased for 2,00,000 and sold at 1,40,000 after two years. If depreciation is charged @ 10% on SLM method, find the profit or loss on sale of the car?

   A. 20,000 Loss
   B. 20,000 Profit
   C. 10,000 Loss
   D. 10,000 Profit

9. Depreciation fund method is also known as__________?

   A. Sinking Fund Method
   B. Annuity Method
   C. Sum of Year Digits Method
   D. None of these

   Submitted by: Syed Nizakat Ali Shah

10. Which of the following is not true with regard to preparation of Profit & Loss Account?

    A. Profit & Loss Account is prepared for a certain period and hence it is an interim statement
    B. Profit & Loss Account does not disclose the effect of non-financial items
    C. Net Profits are ascertained on the basis of current costs
    D. Net Profits as disclosed by P&L Account is not absolute