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WorksheetsQUIZ 3 : TOPIC 9 [ACCOUNTING FOR NON CURRENT ASSETS]
Total questions: 25
Worksheet time: 13mins
Whats the difference between a current and non current asset
One is held for 12 months, whereas the other is held for a period greater than 12 months
there is no difference
one has a 'non' infront of it
One is a present economic resource whereas the other isn't a present economic resource
How do you calculate the cost of a non current asset
You can't calculate it
Original purchase price + all other costs
Original purchase price of the asset
Original purchase price + all other once off costs
What is useful life
Expected amount of time the business intends to use the current asset for
Expected amount of time the business intends to use the non current asset for
The amount the asset is intended to be purchased for
All of the ABOVE
How to calculate annual depreciation rate
Historical costs - residual value
-----------------------------------------
useful life
depreciation expense/ historical cost
none of above
A and B
Explain non-current assets (NCA)
NCA provide benefits that last beyond one accounting period and are posted to the Income statement
NCA provide benefits that last within one accounting period and are posted to the Financial Position
NCA provide benefits that last beyond one accounting period and are posted to the Financial Position
NCA provide benefits that last beyond one accounting period and are for owner's use
The book value of a fixed asset is always equal to its fair market value.
TRUE
FALSE
Additions and improvements to a fixed asset that increase the asset's operating efficiency, productive capacity, or expected useful life are recorded as operational expenses for the current period.
TRUE
FALSE
Expenditures relating to the acquisition of non current assets are treated as
capital expenditure
revenue expenditure
expenses
revenue
Expenditures for the maintenance of non-current assets are treated as
revenue expenditure
capital expenditure
revenue
expenses
Below are the examples of Capital Expenditure EXCEPT for
Legal fees
Installation costs
Costs to acquire non-current assets
Fuel for motor vehicles
Below are the examples for Revenue Expenditure EXCEPT for
Repairs of motor vehicle
Depreciation of non-current assets
Installation costs
Motor vehicle insurance (2nd year onwards)
The Revenue Expenditure will reduce the net profit at
statement of financial position
statement of profit and loss
accounting equations
journal
Expenditures for the Extensions or additions to buildings of non-current assets are treated as
revenue expenditure
capital expenditure
revenue
expenses
The Capital Expenditure costs will increase the value of Non Current Assets at
statement of financial position
statement of profit and loss
accounting equations
journal
If Revenue Expenditure are wrongly classified as Capital Expenditure :
The expenses will be overstated
the net profit will be understated
The Non Current Assets & the capital of organization will be understated
The Non Current Assets & the capital of organization will be overstated
If Capital Expenditure are wrongly classified as Revenue Expenditure:
The expenses will be understated
the net profit will be overstated
The Non Current Assetss & the capital of organization will be understated
The Non Current Assets & the capital of organization will be overstated
When recorded the depreciation expenses, ____ account is debited and ____ account is credited.
Depreciation expenses; Asset
Depreciation expenses; Accumulated depreciation
Accumulated Depreciation; Depreciation expenses
Asset ; Accumulated depreciation
Accumulated Depreciation; Asset
The following are the examples of tangible non currents assets except
Factory machines
Trolleys in supermarkets
Office equipments
Customer goodwill
The following should be added in the calculation of true cost of NCA except
Shipping charges
Installation charges
Admin expenses
sales tax
The following are the common causes of depreciation except..
Wear and tear
Passage of time
Usage
Amount of bad debts
Depreciation arises because of -
Obsolescence
Constant use of assets
expiry of time
All of these
Factors taken into consideration for providing depreciation are -
Total cost of assets
Estimated useful life of the asset
Estimated scrap value of the asset
All of the above
Depreciation is a process of
valuation
cost allocation
cash accumulation
cost evaluation
Identify a statement below as true or false.
'Depreciation is a process of asset valuation, not cost allocation'
True
False
When recorded the disposal of asset, ____ account is debited and ____ account is credited.
Depreciation expenses; Asset
Depreciation expenses; Accumulated depreciation
Accumulated Depreciation; Depreciation expenses
Asset ; Accumulated depreciation
Accumulated Depreciation; Asset
