Depreciation and its Accounting – Quiz 1

Depreciation and its Accounting is the Sixth Unit (Unit 6) under Module A: Accounting Principles and Processes of Paper – III (Accounting & Financial Management for Bankers)

If you are appearing for the Upcoming JAIIB Exams, it is important to understand the fundamental concepts of the Topics and clear your doubts. We have prepare and collected some fundamental questions and answers in the form of MCQ Questions and Answers arranged into multiple Quizzes having 10 Questions in each Quiz. It can help you to understand the topics. A solid fundamental understanding will build your confidence and encourage you to think critically and enables you to answer the JAIIB Questions correctly in the Exam and increase your chances to pass the exam with flying colors. It is advisable to practice these Questions and Answers on regular basis to raise your confidence Level.

Practice MCQ Question and Answer – Depreciation and its Accounting

Quiz 1

1. What does depreciation represent in accounting ?





….
Answer is (b)
A charge to profit and loss account for the fall in asset value

2. What parameters are considered when determining depreciation ?

  1. Market price
  2. The cost of the asset
  3. The estimated residual or scrap value at the end of its life
  4. The estimated number of years of its commercial life




….
Answer is (d)
The cost of the asset, The estimated residual or scrap value at the end of its life, The estimated number of years of its commercial life

3. What are possible causes of depreciation ?

  1. Wear and tear due to actual use
  2. Accidents
  3. Increase in market price
  4. Efflux of time




….
Answer is (b)
Wear and tear due to actual use, Accidents, Efflux of time

4. Why is depreciation necessary in accounting ?

  1. To maximize profit
  2. To know the correct profit
  3. To show correct financial position
  4. To make provision for replacement of asset




….
Answer is (c)
To know the correct profit, To show correct financial position, To make provision for replacement of asset

5. How is the decrease in asset value attributed to depreciation characterized ?





….
Answer is (a)
Gradual and continuous

6. What can lead to depreciation of assets ?

  1. Accidents
  2. Increase in market price
  3. Efflux of time
  4. Obsolescence




….
Answer is (b)
Accidents, Efflux of time and Obsolescence

7. What is the purpose of considering depreciation in financial reporting ?

  1. To overstate profit
  2. To understate profit
  3. To know the correct profit
  4. To make provision for replacement of asset




….
Answer is (c)
To know the correct profit and To make provision for replacement of asset

8. What does depreciation primarily represent in terms of asset value ?





….
Answer is (c)
A reduction in value

9. What are the various approaches to calculating depreciation ?

  1. Accelerated depreciation method
  2. Fixed percentage on original cost or fixed installment or straight-line method
  3. Reducing installment methods or written down value method
  4. Sum of years digits method




….
Answer is (c)
Fixed percentage on original cost or fixed installment or straight-line method, Reducing installment methods or written down value method and Sum of years digits method

10. Which methods are used for providing depreciation ?

  1. Double-declining balance method
  2. Fixed percentage on original cost or fixed installment or straight-line method
  3. Units of production method
  4. Sum of years digits method




….
Answer is (b)
Amounts receivable from customers and payable to suppliers
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Quiz Numbers

1

Read More: MCQ Type Questions and Answers from Paper – III (Accounting & Financial Management for Bankers)

Module A: Accounting Principles and Processes

Module B – Financial Statements and Core Banking Systems

  • Balance Sheet Equation
  • Preparation of Final Accounts
  • Company Accounts – I
  • Company Accounts – II
  • Cash Flow & Funds Flow
  • Final Accounts of Banking Companies
  • Core Banking Systems & Accounting in Computerised Environment

Module C – Financial Management

  • Financial Management – An Overview
  • Ratio Analysis
  • Financial Mathematics – Calculation of Interest & Annuities
  • Financial Mathematics – Calculation of YTM
  • Financial Mathematics – Forex Arithmetic
  • Capital Structure and Cost of Capital
  • Capital Investment Decisions/Term Loans
  • Equipment Leasing/Lease Financing
  • Working Capital Management
  • Derivatives

Module D – Taxation and Fundamentals of Costing

  • Taxation: Income Tax/TDS/Deferred Tax
  • Goods & Services Tax
  • An Overview of Cost & Management Accounting
  • Costing Methods
  • Standard Costing
  • Marginal Costing
  • Budgets and Budgetary Control