FA 6th Quiz

Which one of the following should not be capitalized?

• Cost of building

• Cost of installation of plant and machinery

• Cost of patent

• Cost of maintenance

Which one of the following should be capitalized?

• Interest expenses

• Cost of raw material

• Cost of repair

• Cost of copyright

If a firm erroneously charges the capitalization of expenditure as expensing of expenditure:

• Current year Expenses- Understated

• Current year Profit – Overstated

• Asset Value – Understated

• Asset Value will not be impacted

If a firm erroneously charges the expensing of expenditure as capitalization of expenditure:

• Current year Expenses – Overstated

• Current year Profit – Understated

• Asset Value – Overstated

• Asset Value will not be impacted

Which on of the following is not a factor to calculate depreciation?

• Cost of the asset

• Useful life of the asset

• Scrap value

• Repair cost of the asset

Which of the following could not be a valid reason of depreciation?

• Bad operating results

• Physical damage

• wear and tear

• Technology change

In case of software firm which of the following method of depreciation is more suitable?

• Straight line method

• Written down value method

• Production unit method

• Any method

In case of vehicles which of the following method of depreciation is more suitable?

• Straight line method

• Written down value method

• Production unit method

• Any method

In case of a machinery with a given number of machine hours for usage, which of the following method of depreciation is more suitable?

• Straight line method

• Written down value method

• Production unit method

• Any method