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Depreciation, Provisions, and, Reserves

Total questions: 20

Worksheet time: 20mins

Name
Class
Date
1.

Depreciation is decline in the book value of _________

a)

intangible assets

b)

liabilities

c)

fixed assets

d)

investments

2.

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

a)

straight-line method

b)

reducing balance method

c)

both

d)

none of these

3.

Depreciation is an expense that involves cash outflow.

a)

True

b)

False

4.

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

a)

Reducing Balance Method

b)

Sum-of-the-year' digits method

c)

Straight-line method

d)

unit of production method

5.

Capital reserves are normally created out of _________.

a)

capital profit

b)

normal operating activities

c)

free or distributable profits

d)

all of the above

6.

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

a)

Debenture Redemption Reserve

b)

Dividend Equalisation Reserve

c)

Capital Reserve

d)

General Reserve

7.

If the amount of any known liability cannot be determined accurately

a)

Reserve should be created

b)

Reserve should be created

c)

Provision should be created

d)

None of the above

8.

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

a)

Cost price

b)

Scrap Value

c)

Market Price

d)

None

9.

The term amortisation is used to write off ___________.

a)

Fixed Assets

b)

Tangible Assets

c)

Wasting Assets

d)

Intangible Assets

10.

Provision is a _________.

a)

General Reserve

b)

Secret Reserve

c)

Specific Reserve

d)

None of the above

11.

dividend equilization reserve and debenture redemption reserve are examples of __________.

a)

revenue reserve

b)

general reserve

c)

capital reserve

d)

secret reserve

12.

according to companies act 1956, secret reserves can be created by _______________.

a)

only private companies

b)

banking and insurance companies

c)

only public companies

d)

companies registered under companies act

13.

making excessive provisions for doubtful debits builds up the secret reserve in the business.

a)

True

b)

False

14.

under the fixed installment method of providing depriciation, it is calculated on ______________.

a)

scrap value

b)

balance amount

c)

original cost

d)

none of them

15.

process of becoming out of date or obsolete is termed as _____________.

a)

physical deterioration

b)

depletion

c)

obsolescence

d)

amortization

16.

following are the causes of depreciation except

a)

natural resources

b)

fixed assets

c)

liabilities

d)

intangible assets

17.

which of the following is the example of capital reserve?

a)

workmen's compensation fund

b)

premium received on issues of shares or debentures

c)

general reserve

d)

none of these

18.

dividend equalization reserve is __________.

a)

specific reserve

b)

secret reserve

c)

general reserve

d)

none of these

19.

General reserves are shown in _________________.

a)

re-evaluation account

b)

profit and loss account

c)

Balance sheet

d)

none of these

20.

provision is created by debitting __________.

a)

profit and loss a/c

b)

profit and loss appropriation a/c

c)

trading a/c

d)

none of these