Please refer to Chapter 7 Depreciation Provisions and Reserves MCQ Class 11 Accountancy with answers below. These multiple-choice questions have been prepared based on the latest NCERT book for Class 11 Accountancy. Students should refer to MCQ Questions for Class 11 Accountancy with Answers to score more marks in Grade 11 Accountancy exams. Students should read the chapter Depreciation Provisions and Reserves and then attempt the following objective questions.

MCQ Questions Class 11 Accountancy Chapter 7 Depreciation Provisions and Reserves

Depreciation Provisions and Reserves MCQ Class 11 Accountancy provided below covers all important topics given in this chapter. These MCQs will help you to properly prepare for exams.

Question. Which of the following methods of depreciation is not recognized by Income Tax Law?
(a) Straight line Method
(b) None of these
(c) Both, Straight Line and Diminishing Balance Methods
(d) Diminishing Balance Method

Question. If the original cost of the asset is ₹ 2,00,000 and depreciation is charged @ 10% p.(a) at written down value, the book value of the assets after a period of three account year will be
(a) ₹ 140000
(b) ₹ 160000
(c) ₹ 162000
(d) ₹ 145800

Question. If the original cost of an asset is ₹ 5,00,000 and rate of the depreciation is 10% what will be difference in the book value of the cost under SLM and WDV method after a period of 3 years?
(a) NIL
(b) ₹ 14500
(c) ₹ 22500
(d) ₹ 18750

Question. Dividend Equalisation Reserve is :
(a) Specific Reserve
(b) None of these
(c) Secret Reserve
(d) General Reserve

Question. Provision is created by debiting :
(a) Profit and Loss Account
(b) None of these
(c) Profit and Loss Appropriation Account
(d) Trading Account

Question. Capital profit is
(a) Profit from sale of goods
(b) Profit from sale of marketable securities
(c) Profit from sale of long term investment
(d) Both b & c

Question. Provision is created by debiting :
(a) Profit and Loss Account
(b) None of these
(c) Profit and Loss Appropriation Account
(d) Trading Account

Question. Which method of depreciation suffers from the limitation of unequal burden on profit and loss account?
(a) Fixed Instalment Method
(b) Reducing Balance Method
(c) Depletion Method
(d) Annuity method

Question. Dividend Equalisation Reserve is a
(a) Capital Reserve
(b) General Reserve
(c) Revenue Reserve
(d) Deferred Revenue Reserve

Question. Which of the following represent Secret Reserve
i. Undervaluation of inventories/stock ii. Charging capital expenditure to P&L account
iii. Making excessive provision for doubtful debts
iv. Showing contingent liabilities as actual liabilities
(a) i, ii and iii
(b) i, ii and iv
(c) ii, iii and iv
(d) All of the above

Question. Depreciation is which of the following expenditure:
(a) Non-cash
(b) Both cash and non-cash
(c) Cash
(d) None of the above

Question. Under which method the amount of depreciation remains same year after year?
(a) Fixed Installment Method
(b) Reducing Balance Method
(c) Annuity method
(d) Depletion Method

Question. Depreciation is a
(a) non-cash expense
(b) cash expense
(c) non-cash gain
(d) cash gain

Question. Depreciation provides fund for
(a) replacement
(b) repairs
(c) expansion of capital
(d) All of the above

Question. Provision for cash discount on debtors is a percentage of
(a) Debtors
(b) Net debtors
(c) Net debtors less provision for doubtful debt
(d) Net sales

Question. In the calculation of depreciation, all of the following items are actually estimates except:
(a) Useful life
(b) Residual value
(c) Historical cost
(d) Salvage value

Question. If adequate maintenance expenditure is incurred, depreciation need
(a) not be charged.
(b) be charged at lower rate
(c) be charged at usual rate
(d) be charged at higher rate

Question. When it is certain that a debt won’t be recovered Which of the following is correct?
(a) Provision for bad debt is created
(b) Account receivable is credited
(c) Bad debts is credited
(d) Sales is debited

Question. The opening and closing balances of provision for doubtful debts account are ₹ 1000 and ₹ 2000 whereas bad debts are totalled ₹ 200
(a) ₹ 800 is to be deducted from total debtors balance in the balance sheet
(b) ₹ 1200 is to be subtracted from total debtors balance in the balance sheet
(c) ₹ 800 is to be added to total debtors balance in the balance sheet
(d) ₹ 1200 is to be added to total debtors balance in the balance sheet

Question. Depreciation is a process of
(a) Valuation
(b) Allocation
(c) Both valuation and allocation
(d) None of them.

Question. Under the diminishing balance method, depreciation is calculated on:
(a) Scrap value
(b) On original value
(c) On book value
(d) None of them

Question. Asset which have a limited useful life are termed as
(a) Limited assets
(b) Depreciable assets
(c) Unlimited asset
(d) None of these

Question. Total depreciation cannot exceeds its:
(a) Scrap value
(b) Cost value
(c) Market value
(d) Depreciable value

Question. Depreciation is:
(a) An income
(b) An asset
(c) A loss
(d) A liability

Question. In the provision method of depreciation the asset always appears at
(a) Cost price
(b) Market Price
(c) Scrap Value
(d) None

Question. Which of the following is the most common cause of bad debt?
(a) Debtor refusal to repayment
(b) Debtor left the country
(c) Debtor committed a crime
(d) Debtor declared to be a bankrupt

Question. Which of the following is an alternative term for “provision for doubtful debts”?
(a) Reserve for doubtful debts
(b) Stipulation for doubtful debts
(c) Allowance for doubtful debts
(d) Discount for doubtful debts

Question. Which of the following is/are a charge against profit
(a) ‘Provision
(b) Depreciation
(c) Provision and Depreciation
(d) Provision, Depreciation and Reserve

Question. Cost of assets includes
i. cost of item ii. Installation
iii. Freight and Transportation iv. Proceeds from Test run
(a) i, ii and iii
(b) ii, iii and iv
(c) i, iii and iv
(d) All of the above

Question. Which of the following is a commonly used base to create the provision for doubtful debts?
(a) Total purchases
(b) Total credit sales
(c) Total current assets
(d) Total current liabilities

Question. An increase in the value of fixed asset is referred to as:
(a) Addition
(b) Acclamation
(c) Appreciation
(d) Attraction

Question. Under the revaluation model of fixed assets provided by the international accounting standards, the revaluation of the fixed assets should be carried out
(a) After 10 years
(b) After 7 years
(c) Once 2 to 5 years
(d) Once 3 to 5 year

Question. The purchase price of a software that will be used for more than 12 months should be regarded as
(a) A revenue expenditure
(b) A capital expenditure
(c) A deferred revenue expenditure
(d) A deferred capital expenditure

Question. Which of the following is the example of Revenue Reserve?
(a) Profit on Redemption of Debentures
(b) Profit on Revaluation of Fixed
(c) Investment Fluctuation Fund
(d) Profit on Re-issue of forfeited shares

Question. According to Companies Act, 1956 Secret Reserves can be created by:
(a) Only Private Company
(b) Banking and insurance companies
(c) Only Public Company
(d) Companies Registered under Companies Act

Question. Depreciable amount + Residual value of a fixed asset =?
(a) Depreciation expenses
(b) Accumulated depreciation
(c) Cost of the fixed asset
(d) Future economic benefits of a fixed asset

Question. An alternative term used for accumulated depreciation expenses?
(a) Provision for depreciation
(b) Cumulative depreciation
(c) Targeted depreciation
(d) Progressive depreciation

Question. General reserve is a type of
(a) Revenue reserve
(b) Capital Reserve
(c) Both A&B
(d) Neither A nor B

Question. Depreciation is charge against profit under the concept of
(a) Matching
(b) Business Entity
(c) Revenue Recognition
(d) Consistency

Question. At the end of the year, Depreciation Account is transferred to :
(a) Balance Sheet
(b) Trading Account
(c) Profit & Loss Appropriation Account
(d) Profit & Loss Account

Question . Under Reducing Balance Method, depreciation to be charged :
(a) Scrap Value
(b) None of these
(c) Real Value
(d) Original value

Fill In The Blanks

Question. The depletion amount of mining rights , if the mine is acquired for Rs,10,00,000 and for 5 years is __________ .

Question. Reduction in the book value of an asset over a period of time is called___________. 

Question. Cost of an asset minus scrap value /life of an asset is the formulae for calculating depreciation under _____________ method.

Question. In the event of an asset being sold, a new account titled ________________ is opened.

Question. Estimated sales value of an asset after its working is called_____.

Question. Annual depreciation of an asset is Rs.25,000 and the cost of acquiring an asset is Rs.5,00,000. So the rate of depreciation would be ____% p.a.

Question. The asset which is an exception from depreciation is _________.

Question. Provision is a charge on ____________.

Question. Revenue reserve is created out of ________whereas capital reserve is created out of _____________.

Question. The book value of an asset is Rs. 85,000 and the original cost is Rs.1,00,000. If the asset is sold at a loss of Rs. 8000, the sale proceeds will be _________.

Question. Providing depreciation reduces the amount of profit available for __________.

Question. Due to _____ and new technology, the old asset becomes obsolete.

Question. When Provision for depreciation account is created depreciation is charged to __________________.

Question. The book value of an asset is Rs. 93,000 and the original cost is Rs. 1,20,000. After earning a profit of Rs. 5000, the asset is sold at Rs. ________.

Question. On 31.3.18 the balance in land account stood at Rs.1,00,000. The company charged depreciation at the rate of 10%on fixed assets under SLM. The amount of depreciation would be ___________.

Question. In the books of Vandana Ltd. the machinery account showed a debit balance of Rs.1,20,000 as on april 1,2019 and Provision for depreciation account at Rs.24,000. The Machinery was sold on Dec31, 2019 for Rs.56,000. The company charges depreciation @ 20% p.a. on Straight Line Method. Profit or Loss on sale of the Machinery is Rs._____. 

Question. Land is not depreciated as its useful life is _____________.

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

Question. Creation of reserves reduces the taxable ————-of the business.

Question. Depreciation is the _____ in the value of fixed assets.

Question. Depreciation is decline in the value of ………………….

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

True/ False

Question. In Straight Line Method equal depreciation is charged every year.

Question. In the year of Loss, depreciation should not be provided on the asset.

Question. Depreciation is provided only on the fixed assets except land.

Question. For calculating depreciable cost of an asset, accumulated depreciation is deducted from Original cost of an asset.

Question. Under the Straight Line Method, asset is depreciated more in the initial years as compared to the later years of its life.

Question. Provision reduces taxable profits.

Question. Provision is an appropriation of profit.

Question. Provision can be invested outside the business.

Question. Creation of provision is necessary as per law.

Question. A Provision is not shown under the head Current Liabilities or as deduction of the asset. 

Question. If the amount of reserve is invested outside the business then it is called as Reserve Fund.

Question. Reserves are the amount set aside out of capital.

Question. If adequate maintenance expenditure is incurred depreciation need not to be charged. 

Question. The book value of the asset can never be reduced to zero in Straight line method. 

Question. Asset Disposal account is generally used when a part of an asset is sold.

Question. Depreciation is charged on all tangible assets.

Question. The patents, copyrights and loose tools, their value after their agreement governing their use in business comes to an end after the expiry of predetermined period.

Question. Depletion term is used in case of intangible assets.

Match The Following

Question.

i) An expense that can be added to purchase price of an asset to calculate Original Cost for the purpose of charging depreciation is	a. Repairs
ii) An expense that cannot be added to purchase price of an asset to calculate Original Cost for the purpose of charging depreciation is	b. Repairs to second hand machinery

Question.

i) It is not a Depreciable Tangible Asset	a. land
ii) Amortisation is charged on	b. Plant
	c. Goodwill

Question.

i) Original cost of an asset is Rs. 1,05,000; Scrap Value is Rs.5,000 and estimated life of the asset is 5 years. Calculate the annual amount of depreciation	a. Rs.20,000
ii) Book value of an asset is Rs.1,00,000 ; its Original Cost is Rs.2,05,000 and the sale proceed is Rs.1,80,000. Profit on sale of the asset would be	b. Rs. 80,000
	c. Rs.25,000

Question.

i) What would be the total amount of depreciation of two years ending on March31,2018, if, the machinery was purchased on September 30,2016 for Rs.2,00,000 and the rate of depreciation is 15% p.a. under Straight Line Method?	a. Rs.8,00,000
ii) Book Value of an asset after 2 years is Rs.80,000; Rate of depreciation is 10% p.a. under Straight Line method. The Original Cost Of an asset would be	b. Rs. 1,00,000
	c. Rs.8,000
	d. Rs.45,000

Question.

i) It is not considered as a factor affecting amount of depreciation	a. Rate of Depreciation
ii) It is the Original Cost minus scrap value of an Asset	b. Depreciable Cost
	c. Cost of an Asset

Question.

i) When Provision for depreciation Account is maintained, depreciation is charged to	a. Asset account
ii) Depreciation charged on an Asset is Debited to	b. Provision for Depreciation Account
	c. Depreciation Account

Question.

i) Accumulated depreciation account is another name of	a. Asset Disposal Account
ii) Depreciation charged on the asset sold will be charged to	b. Provision for Depreciation Account
	c. Depreciation of All fixed assets
	d. Asset Account

Question.

i) April 1, 2016, a machinery was purchased for Rs.1,00,000. Rate of Depreciation Charged @ 12% p.a. under Straight line method. The book value on May 31,2017 would be	a. Rs. 14,000
ii) Original Cost of a machinery sold for Rs.86,000 was Rs.1,20,000. The book value on the date when the machinery was sold is Rs.1,00,000. calculate the total amount of depreciation on machinery sold.	b. Rs.86,000
	c. Rs.34,000

Question.

i) Obsolescence does not arises due to	a. Change in the demand of a product made by such asset
ii) Abnormal factor causing depreciation includes…	b. Technological changes
	c. Sudden natural disaster
	d. Improvement in the production method

Question.

i) Depreciation Helps in determining	a. Helps to increase the value of the asset
ii) The Asset which is an exception from depreciation	b. Accurate level of profit
	c. Furniture
	d. Land

Question.

i) Cost of depreciation remains constant	a. Fixed installment Method
ii) Concept used for calculating depreciation is	b. Diminishing balance method
	c. Matching concept
	d. Prudence concept

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