What is defined as the reduction of the value of certain natural resources such as mines, oil, timber, quarries, etc. due to the gradual extraction of its contents ?

Related Mcqs:

1. The Saudi Arabian Oil Refinery developed an oil well which is estimated to contain 5,000,000 barrels of oil at an initial cost of $ 50,000,000. What is the depletion charge during the year where it produces half million barrels of oil? Use Unit or Factor method in computing depletion?

   A. $ 5,000,000.00
   B. $ 5,010,000.00
   C. $ 5,025,000.00
   D. $ 5,050,000.00

2. What is defined as the reduction or fall of the value of an asset due to constant use and passage of time ?

   A. Depletion
   B. Inflation
   C. Depreciation
   D. Deflation

3. What is defined as the certificate of indebtedness of corporation usually for a period not less than 10 years and guaranteed by a mortgage on certain assets of a corporation ?

   A. Bond
   B. T-bills
   C. Stock
   D. Promissory note

4. What type of depreciation is due to the reduction in the demand for the function that the equipment or asset was designed to render ?

   A. Functional depreciation
   B. Design depreciation
   C. Physical depreciation
   D. Demand depreciation

5. What type of depreciation is due to the reduction of the physical ability of an equipment or asset to produce results ?

   A. Functional depreciation
   B. Design depreciation
   C. Physical depreciation
   D. Demand depreciation

6. What is the reduction in the money value of capital asset is called ?

   A. Capital expenditure
   B. Capital loss
   C. Loss
   D. Deficit

7. What refers to the value of an intangible item which arises from the exclusive right of a company to provide a specified product and service in a certain region of the country ?

   A. Company value
   B. Going value
   C. Goodwill value
   D. Franchise value

8. A VOM has a selling price of P 400. If its selling price is expected to decline at a rate of 10% per annum due to obsolescence, what will be its selling price after 5 years ?

   A. P 222.67
   B. P 212.90
   C. P 236.20
   D. P 231.56

9. A machine costs of P 8,000 and an estimated life of 10 years with a salvage value of P 500. What is its book value after 8 years using straight line method ?

   A. P 2,000.00
   B. P 2,100.00
   C. P 2,200.00
   D. P 2,300.00

10. What do you call any particular raw material or primary product such as cloth, wool, flour, coffee, etc ?

    A. Utility
    B. Necessity
    C. Commodity
    D. Stock