Maharashtra Board 11th BK Important Questions Chapter 7 Depreciation

Balbharti Maharashtra State Board 11th Commerce Book Keeping & Accountancy Important Questions Chapter 7 Depreciation Important Questions and Answers.

Maharashtra State Board 11th Commerce BK Important Questions Chapter 7 Depreciation

1. Answer in One Sentence only.

Question 1.
What is the Reducing Balance Method of charging depreciation?
Answer:
A method of charging depreciation in which depreciation is charged on fixed assets at a fixed percentage on its opening balance every year is called the reducing balance method.

Question 2.
Under which method of depreciation the amount of depreciation remains constant every year?
Answer:
Under the Fixed Instalment Method of depreciation, an amount of depreciation remains constant every year.

Question 3.
Under which method of depreciation does the number of depreciation change every year?
Answer:
Under the Reducing Balance Method of depreciation amount of depreciation changes every year.

Question 4.
Which method of depreciation would you suggest for depreciating a five years lease?
Answer:
For depreciating a five years lease fixed installment Method of depreciation is suggested.

Question 5.
What is meant by the cost of assets?
Answer:
The sum total of the purchase price of a fixed asset and its installation charges are called the cost of the asset.

2. Write the word/term/phrase which can substitute each of the following statements:

Question 1.
The method of charging depreciation under which depreciation is calculated on the original cost of an asset.
Answer:
Fixed Instalment Method

Question 2.
The method of charging depreciation under which depreciation is calculated on the balance amount.
Answer:
Reducing Balance Method

Question 3.
The Latin word for reduction or decline in the value of a fixed asset due to its use.
Answer:
Depretium

Question 4.
An amount to which the balance in the depreciation account is transferred.
Answer:
Profit and Loss A/c

Question 5.
Transport charges, coolie charges, charges for electrification, etc. incurred for the erection of machinery.
Answer:
Installation Charges

3. Select the most appropriate answers from the alternatives given below and rewrite the sentences.

Question 1.
Wages paid for installation of machinery is debited to ____________ account.
(a) Profit and Loss
(b) Trading
(c) Wages
(d) Machinery
Answer:
(d) Machinery

Question 2.
Depreciation arises because of ____________
(a) wear and tear
(b) inflation
(c) loss in business
(d) profit in business
Answer:
(a) wear and tear

Question 3.
The profit on sale of an asset is debited to ____________ A/c.
(a) Profit and Loss
(b) Reserve
(c) Asset
(d) Balance sheet
Answer:
(c) Asset

Question 4.
By the amount of depreciation the value of asset ____________
(a) decreases
(b) increases
(c) becomes zero
(d) remains constant
Answer:
(a) decreases

Question 5.
In fixed instalment system the amount of depreciation is ____________ every year.
(a) constant
(b) fluctuating
(c) increased
(d) decreased
Answer:
(a) constant

Question 6.
Under ____________ method depreciation is calculated on written down value.
(a) Fixed Instalment
(b) Reducing Balance
(c) Revaluation
(d) Depletion
Answer:
(b) Reducing Balance

Question 7.
Under the ____________ system of depreciation, the amount of depreciation does not change from year to year.
(a) Fixed Instalment
(b) Reducing Balance
(c) Depletion
(d) Machine Hour Rate
Answer:
(a) Fixed Instalment

Question 8.
Depreciation = \(\frac{Cost of Asset (-) ………….}{Estimated life of Asset}\)
(a) Purchase price
(b) Scrap value
(c) Installation charges
(d) months
Answer:
(b) Scrap value

4. State whether the following statements are True or False with reasons.

Question 1.
There is no need to provide depreciation if the asset is maintained with care.
Answer:
This statement is False.
There is no relation between good maintenance of assets and depreciation working life of fixed assets decreases with the passage of time and the introduction of new technology. So even assets are maintained with care depreciation is provided.

Question 2.
Under the Reducing Balance, method depreciation is charged on the original cost.
Answer:
This statement is False.
Underwritten down value method depreciation is calculated at a certain fixed rate of percentage every on the balance of the asset which is brought forward from the previous year.

5. Complete the following sentence.

Question 1.
____________ is the major cause for Depreciation.
Answer:
Normal and Natural wear of Tear

Question 2.
Depreciation is ____________ to the business.
Answer:
Loss

Question 3.
Depreciation is necessary to make provision for ____________ of old assets.
Answer:
replacement

Question 4.
Depreciation enables the business to compute and pay the correct amount of ____________ to the Government.
Answer:
Tax

Question 5.
____________ cost concept is use for depreciation of Assets.
Answer:
Historical

Question 6.
Fixed Installment Method of depreciation is also known as ____________ cost method.
Answer:
Original

Question 7.
____________ method of depreciation is recognised by Tax/Law.
Answer:
Written Down

Question 8.
____________ account is credited when incidental expenses paid on acquiring Assets.
Answer:
Cash/Bank

Question 9.
Balance of depreciation A/c is transferred to ____________ A/c at the end of financial year.
Answer:
profit and loss

Question 10.
Depreciation is ____________ expenses.
Answer:
non cash

6. Do you agree or disagree with the following statements.

Question 1.
Depreciation is charged on current Assets only.
Answer:
Disagree

Question 2.
Depreciation is not charged on Intangible assets.
Answer:
Disagree

Question 3.
No depreciation is charged on Land.
Answer:
Agree

Question 4.
Written Down value of the asset is calculated by adding depreciation for a period of use of assets.
Answer:
Disagree

Question 5.
No depreciation is charged on assets purchased on credit.
Answer:
Disagree

7. Correct the following statement and rewrite the statement.

Question 1.
Depreciation is cash expenses.
Answer:
Depreciation is a non-cash expense.

Question 2.
The depreciation account is a Real account.
Answer:
The depreciation account is a Nominal account.

Question 3.
Wages paid on the installation of Machinery is Debited to wages A/c.
Answer:
Wages paid on the installation of Machinery is Debited to Machinery A/c.

Question 4.
Depreciation is charged only when the business is making a loss.
Answer:
Depreciation is charged whether a business is making a profit or loss.

Question 5.
Depreciation increases the value of an asset.
Answer:
Depreciation reduces the value of the Asset.