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DEPRECIATION
Test Description: Test your knowledge on methods of depreciation.
Instructions: Answer all questions to get your test result.
1) Which method of depreciation uses the formula = (cost - total depreciation) * %
A
STRAIGHT LINE METHOD
B
MARKET VALUE
C
COST METHOD
D
REDUCING BALANCE METHOD
2) Using straight line method, calcuate the depreciation per annum if the company buys a vehicle for £15,000, keeps it 5 years, and sells for £5,000.
A
£3500
B
£2000
C
£3000
D
£1000
3) Annual calculation of depreciation is shown in which final account
A
PROFIT AND LOSS ACCOUNT
B
BALANCE SHEET
C
BANK ACCOUNT
D
TRADING ACCOUNT
4) The total depreciation calculated to date is shown in which final account
A
PROFIT AND LOSS ACCOUNT
B
BALANCE SHEET
C
BANK ACCOUNT
D
TRADING ACCOUNT
5) The depreciation calculations are recorded in which ledger account
A
bank account
B
expense account
C
provision for depreciation account
D
asset account
6) Using the reducing balance method, calcuate depreciation for year 4. The annual rate is 10%. The asset cost £20,000.
A
1458
B
1620
C
1800
D
2000
7) The net book value of the companies vehicles is £15,000. The current market value of the vehicles is £12,500. How much is this year's depreciation?
A
£12,500
B
£27,500
C
£2,500
D
£5,000
8) The headings added to the balance sheet for fixed assets are:
A
CASH TOTAL DEPRECIATION NET BOOK VALUE
B
COST ANNUAL DEPRECIATION BALANCE
C
COST TOTAL DEPRECIATION NET BUYING VALUE
D
COST TOTAL DEPRECIATION NET BOOK VALUE
9) Which reason for depreciation is untrue?
A
wear and tear
B
inadequate for purpose
C
obselete
D
fit for purpose
10) Which SSAP covers depreciation?
A
12
B
11
C
13
D
10
*select an answer for all questions
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