Class 11 Accountancy MCQ Questions of Depreciation, Provisions and Reserves with Answers have been provided with solutions and have been prepared based on the expected pattern in upcoming board exams. We have provided Depreciation, Provisions and Reserves Class 11 Accountancy MCQ Questions with Answers to help students understand the concept very well.
Multiple Choice Questions are an important part of exams for class 11 Accountancy and if practiced properly can help you to get higher marks. Each Question has four options followed by the right answer. MCQ Questions Depreciation Provisions and Reserves have been prepared by our team of best accountancy teachers. Refer to more Chapter-wise MCQ Questions for NCERT Class 11 Accountancy for all subjects.
1. 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
2. Asset Disposal A/c is prepared when :
(a) Provision for Depreciation A/c is prepared
(b) Asset A/c is prepared
(c) Profit & Loss A/c is prepared
(d) Depreciation A/c is prepared
3. Which of the following is the example of Capital Reserve?
(a) Workmen’s Compensation Fund
(b) None of these
(c) Premium Received on issue of shares or debentures
(d) General Reserve
4. 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
5. Dividend Equalization Reserve is :
(a) Specific Reserve
(b) None of these
(c) Secret Reserve
(d) General Reserve
6. General Reserves are shown in :
(a) Revaluation Account
(b) Profit and Loss Account
(c) None of these
(d) Balance Sheet
7. Under which depreciation method does the amount of depreciation expenses remains the same throughout the useful life of a fixed asset?
(a) Reducing balance method
(b) Number of units produced method
(c) Machine hours method
(d) Straight-line method
8. Depreciation helps in determining ________.
(a) Increases the value of the asset
(b) Revenue generation
(c) Increase the burden of tax
(d) Accurate level of profit
9. Depreciation charged under diminishing method ________.
(a) Decrease every year
(b) Increase in one year and decrease another year
(c) Same every year
(d) Increase every year
10. Every fixed asset loses its value due to use or other reasons. This decline in the value of assets is known as ________.
(a) Provisions
(b) Depreciation
(c) Devaluation
(d) Amortisation
11. At the end of the year, the depreciation account is transferred to _______.
(a) Trading account
(b) Profit and loss appropriation account
(c) Profit and loss account
(d) Balance sheet
12. According to the 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 the Companies Act
13. 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
14. Depreciation is a process of:
(a) Allocation of cost
(b) None of the above
(c) Valuation of asset
(d) Both valuation of asset and allocation of cost
15. Which of the following statements is NOT true about Provisions?
(a) It is an appropriation of profit.
(b) It is a charge against profits.
(c) It is shown on the liability side of Balance sheet.
(d) It is discretionary as a matter of financial prudence.
16. If the amount of any known liability cannot be determined with substantial accuracy:
(a) A provision should be created.
(b) A Contingent liability should be created.
(c) A definite liability should be created.
(d) A reserve should be created.
17. As per the Original Cost method which is the correct formula for calculating Annual depreciation?
(a) Depreciation = Cost of asset Scrap value/ Estimated life of asset
(b) Depreciation = Scrap value – Cost of asset / Estimated life of asset
(c) Depreciation = Cost of asset – Market value / Estimated life of asset
(d) Depreciation = Cost of asset – Scrap value/ Market value of asset
18. Which of the following is the cause of depreciation?
(a) By permanent fall in prices
(b) By constant use
(c) By Expiry of time
(d) All of the options
19. What Journal Entry will be passed: Value of asset being sold transferred to Asset Disposal Account?
a) Asset Disposal A/c Dr
b) Asset A/c Dr
c) Asset A/c Dr
d) Asset Sale A/c Dr
20. 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
21. Which method of charging depreciation is accepted by Income Tax Act?
a) Written down value method
b) Both Written down value method and Straight Line method
c) Straight Line method
d) None of the above
22. Depreciation is a process of:
a) Allocation of cost
b) None of the above
c) Valuation of asset
d) Both valuation of asset and allocation of cost
23. Depreciation is which of the following expenditure:
a) Non-cash
b) Both cash and non-cash
c) Cash
d) None of the above
24. Which of the following statements is NOT true about Provisions?
a) It is an appropriation of profit.
b) It is a charge against profits.
c) It is shown on the liability side of Balance sheet.
d) It is discretionary as a matter of financial prudence.
25. Which of the following statements is NOT true about Reserves?
a) It is a charge against profits.
b) It is an appropriation of profit.
c) It is shown on the liability side of Balance sheet.
d) It is discretionary as a matter of financial prudence.
