DIGIDAY GRADE 11 ACCOUNTING QUIZ

Depreciation refers to ...

• Lowering the amount of an asset.

• Making an item less expensive.

• Amount by which an asset decreases in value

• Land & buildings reducing in value.

Which of the following is an example of depreciation?

• A car increasing in value over time.

• A computer becoming more expensive.

• Equipment decreasing in value as it ages.

• Land appreciating in value.

What is the formula for calculating depreciation using the straight-line method?

• (Cost of asset - Salvage value) / Useful life

• (Cost of asset * Useful life) / Salvage value

• (Cost of asset + Salvage value) * Useful life

• (Cost of asset / Useful life) - Salvage value

Why is depreciation important for businesses?

• To increase the value of assets

• To accurately reflect the decrease in value of assets over time

• To avoid paying taxes

• To make assets more expensive

Which of the following is a factor that affects the depreciation of an asset?

• Market demand

• Color of the asset

• Age of the asset

• Brand of the asset

Using the straight-line method, a vehicle which costs R15000 would have the following annual depreciation charge at 15% p.a.

• R2200

• R2250

• R1500

• R2400

A company car costing R100 000 is depreciated at 7% per annum. Using the diminished-balance method. What is the depreciation charge for the 3rd year of owning the car? Round off to the nearest Rand if necessary.

• R7 000

• R7 540

• R6 510

• R6 054

A company car costing R100 000 is depreciated at 7% per annum. Using the diminished-balance method. What is the carrying value of the car at the end of the first 2 years

• R86 490

• R93 000

• R80 436

• R87 200

How long would it take to completely write-off equipment costing R10 000 if it was depreciated on a straight-line basis, at 5% per annum?

• 15 years

• 10 years

• 20 years

• 22 years

Type out the following concept:

Sum of all the depreciation charges over the life of an asset