Related Mcqs:

1. A machine has an initial value of Rs. 5000, service life of 5 years and final salvage value of Rs. 1000. The annual depreciation cost by straight line method is Rs______________?

   A. 300
   B. 600
   C. 800
   D. 1000

2. Annual depreciation costs are constant, when the ______________ method of depreciation calculation is used ?

   A. Declining balance
   B. Straight line
   C. Sum of the years digit
   D. None of these

3. Annual depreciation cost are not constant when, the _____________ method of depreciation calculation is used ?

   A. Straight line
   B. Sinking fund
   C. Present worth
   D. Declining balance

4. The depreciation during the year ‘n’, in diminishing balance method of depreciation calculation, is calculated by multiplying a fixed percentage ‘N’ to the ?

   A. Initial cost
   B. Book value at the end of (n – 1)th year
   C. Depreciation during the (n – 1)th year
   D. Difference between initial cost and salvage value

5. Following the six-tenth factor rule, if a log-log plot of capacity of the equipment vs. cost of the equipment is made, then a straight line is obtained, whose slope is equal to_________________?

   A. 0.1
   B. 0.6
   C. 0.2
   D. 0.8

6. A reactor having a salvage value of Rs. 10000 is estimated to have a service life of 10 years. The annual interest rate is 10%. The original cost of the reactor was Rs. 80000. The book value of the reactor after 5 years using sinking fund depreciation method will be Rs _____________?

   A. 40,096
   B. 43,196
   C. 53,196
   D. 60,196

7. Out of the following, the depreciation calculated by the _____________ method is the maximum?

   A. Diminishing balance
   B. Straight line
   C. Sum of the years digit
   D. Sinking fund

8. In declining balance method of depreciation calculation, the _____________________?

   A. Value of the asset decreases linearly with time
   B. Annual cost of depreciation is same every year
   C. Annual depreciation is the fixed percentage of the property value at the beginning of the
   particular year
   D. None of these

9. ‘P’ is the investment made on an equipment, ‘S’ is its salvage value and ‘n is the life of the equipment in years. The depreciation for Rath year by the sum-of year‟s digit method will be____________________?

   A. (P – S)/n
   B. 1 – (P/S)1/m
   C. (m/n) (P – S)
   D. [2 (n – m + 1)/n(n + 1)]. (P – S)

10. Which of the following is not a component of depreciation cost ?

    A. Repairs and maintenance cost
    B. Loss due to obsolescence of the equipment
    C. Loss due to decrease in the demand of product
    D. Loss due to accident/breakdown in the machinery