Depreciation, Provisions, and, Reserves

Depreciation is decline in the book value of _________

• intangible assets

• liabilities

• fixed assets

• investments

Which of the following methods is not recognized by the Income Tax Law?

• straight-line method

• reducing balance method

• both

• none of these

Depreciation is an expense that involves cash outflow.

• True

• False

Under which depreciation method the amount of depreciation expenses remains the same throughout the useful life of a fixed asset?

• Reducing Balance Method

• Sum-of-the-year' digits method

• Straight-line method

• unit of production method

Capital reserves are normally created out of _________.

• capital profit

• normal operating activities

• free or distributable profits

• all of the above

Reserve created for maintaining a stable rate of dividend is termed as _________.

• Debenture Redemption Reserve

• Dividend Equalisation Reserve

• Capital Reserve

• General Reserve

If the amount of any known liability cannot be determined accurately

• Reserve should be created

• Reserve should be created

• Provision should be created

• None of the above

In the provision method of depreciation the asset, always appears at __________.

• Cost price

• Scrap Value

• Market Price

• None

The term amortisation is used to write off ___________.

• Fixed Assets

• Tangible Assets

• Wasting Assets

• Intangible Assets

Provision is a _________.

• General Reserve

• Secret Reserve

• Specific Reserve

• None of the above