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

Related Mcqs:

1. What is the increase in the money value of a capital asset is called?

   A. Profit
   B. Capital gain
   C. Capital expenditure
   D. Capital stock

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. As applied to capitalized asset, the distribution of the initial cost by a periodic changes to operation as in depreciation or the reduction of a debt by either periodic or irregular prearranged programs is called ___________________?

   A. Annuity
   B. Amortization
   C. Capital recovery
   D. Annuity factor

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. A feasibility study shows that a fixed capital investment of P10,000,000 is required for a proposed construction firm and an estimated working capital of P2,000,000. Annual depreciation is estimated to be10% of the fixed capital investment. Determine the rate of return on the total investment if the annual profit is P3,500,000?

   A. 28.33 %
   B. 29.17 %
   C. 30.12 %
   D. 30.78 %

7. What refers to the cumulative effect of elapsed time on the money value of an event, based on the earning power of equivalent invested funds capital should or will earn ?

   A. Present worth factor
   B. Interest rate
   C. Time value of money
   D. Yield

8. In what method of computing depreciation where it assumes that the loss in value is directly proportional to the age of the equipment or asset ?

   A. Straight line method
   B. Sinking fund method
   C. Sum-of-year digit method
   D. Declining balance method

9. What refers to the value of an asset which a disinterested third party, different from the buyer and seller, will determine in order to establish a price acceptable to both parties ?

   A. Book value
   B. Market value
   C. Fair value
   D. Franchise value

10. 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 ?

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