Depreciation and Bills of Exchange – MCQs

Depreciation means a ________ in the value of a fixed asset due to wear and tear.

• Increase

• Decrease

• Maintain

• Appreciation

Depreciation is a ________.

• Cash Expense

• Capital Expense

• Non-cash Expense

• Revenue Receipt

The main purpose of charging depreciation is to ________.

• Reduce profit

• Allocate cost over useful life

• Increase assets

• Avoid tax

Which of the following assets is not depreciated?

• Machinery

• Building

• Furniture

• Land

Depreciation is calculated on the ________ value of an asset.

• Market

• Book

• Revaluation

• Cost

The amount of depreciation depends on the ________.

• Repair charges

• Purchase date

• Estimated useful life

• Manager’s decision

In Straight Line Method (SLM), depreciation is charged:

• More in early years

• More in later years

• Equal every year

• Randomly

In Written Down Value (WDV) Method, depreciation is charged on:

• Original cost

• Book value

• Market value

• Replacement cost

Depreciation method used for vehicles and machinery commonly is:

• SLM

• WDV

• Units of Production

• Sum of Years Digits

If an asset costs ₹1,00,000 and has a scrap value of ₹10,000 after 5 years, the annual depreciation under SLM is:

• ₹20,000

• ₹18,000

• ₹10,000

• ₹25,000