Class XI Accounts Test Paper 2021

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SHORT ANSWER QUESTIONS 1. Define depreciation. State any two reasons for providing depreciation *

2. Give four advantages of Straight Line Method of Providing depreciation. *

3. State four merits of written down value method of providing depreciation. *

4. Sate two demerits of Reducing Instalment Method of providing depreciation. *

5. Distinguish between ‘Straight line Method’ and ‘Written Down value Method’ of Providing Depreciation. *

6. Write short note on Original cost Method’ of providing depreciation with a suitable example. *

7. What is assets disposal account? What is it prepared? Give journal entries for preparation of This account when an assets is disposed off. *

VERY SHORT ANSWER QUESTIONS 1. What is Depreciation? *

Depreciation may be defined as the permanent and Continuing diminution in the quality, Or the value of an asset.

2. Name two causes of depreciation. *

(i) By constant use (ii) By Expiry of time.

3.Write two objectives of providing depreciation. *

(i) For ascertaining the true profit or loss by profit & loss account. (ii) For showings the true financial position by the balance sheet.

4. Give two factors for determining the amount of depreciation. *

(i) Total cost of the asset (ii) Estimated useful life of the assets.

5. What is residual or Scrap value of an assets? *

It is the estimated sale value of the assets at the end of its useful life.

6. What is original cost Method of providing depreciating? *

Under this method depreciation is charged at fixed percentage on the original cost of the Assets. The amount of depreciation remains equal from year to year and as such the Method is also known as ‘Equal Instalment Method’ or ‘Fixed Instalment Mehod’.

7. Give the formula to calculate annual depreciation as per ‘Straight line method . *

Cost of Assets – Estimated Scrap value Estimated Life of Asset in Years

8. Give two merits of providing depreciation by original cost Method. *

. (i) Under merits of providing depreciation by original cost Method. (ii) Under this method, the burden of depreciation on each year’s net profit is equal.

9. Give the main demerit of providing depreciation by original cost method. *

Since repair charged go on increasing year by year, the total burden charged to Profit & loss Account in respect of depreciation and repairs put together will be lighter in earlier years And heavier during later years.

10. What is Written Down value method of providing depreciation? *

Under this method, depreciation is calculated on the written down value of the assets and as The value of assets goes on diminishing year after year, the amount of depreciation charged Every year also goes on declining.

11. Give two merits of providing depreciation by Written Down value Method. *

(i) In this method, the total burden on Profit & Loss Account in respect of depreciation and Repairs put together remains almost equal year after year. (ii) This method is approved by income tax authorities.

12. Give two demerits of Providing depreciation by Written Down value method. *

(i) Assets cannot be written off to zero.(ii) Difficulty in determining rate of depreciation.

13. Give two Points of distinction between original cost Method and Written Down value Method of providing depreciation. *

Option 1

14. What is depreciable cost? *

Depreciable cost= Cost of Asset – Scrap value.

OBJECTIVE TYPE QUESTIONS(A) Fill in the blanks: (i) Depreciation represents a ……………. In the value of fixed assets. *

Fall, diminution, reduction or decrease

(ii) Estimated sale value of an assets after its working life is called………….. *

Scrap value

(iii) ………………… cannot be correctly calculated unless depreciation on fixed assets is duly Provided as business expense. *

Net profits

(iv) Discarding the old Plant & Machinery due to new inventions is called …………. *

Obsolescence

(v) Under the Fixed Installment Mehod, depreciation is calculated on …………… of the asset. *

Original cost

(vi) Under the Written Down Value method, ……………. Remains constant whereas the Amount of depreciation goes on ……………. From year to year. *

Rate of depreciation, decreasing

(vii) The …………… method equalizes the burden on each year’s Profit & loss Account for Depreciation and repairs put together. *

Diminishing balance

(viii) At the time of charging depreciation, assets accounts is ……………. And depreciation Account is …………….. *

Credited; Debited

(ix) Under fixed instalment method, depreciation is calculated by deducting the ……………. Value from the……………….. cost of the assets. *

Scrap, Original

(x) Under …………… method, the value of an assets, even if it becomes obsolete and useless,Cannot be reduced to …………. *

Diminishing balance, Zero

(B) State whether the following statements are true or false: 1. Depreciation is the process of apportionment of the cost of the assets over its useful life. *

True

False

2. Depreciation decreases only the book value the assets, not the market value. *

True

False

3. Written down value method is followed so that the total burden on profit and loss account In respect of depreciation and repairs put together remains almost equal each year. *

True

False

4. Under diminishing balance method, depreciation is charged on the cost price of fixed Assets. *

True

False

5. Under diminishing balance method, depreciation is charged on the original cost of the Assets minus estimated scrap value. *

True

False

6. Depreciation is provided only on fixed assets except land. *

True

False

7. The main objective of providing depreciation is to calculate true profit *

True

False

8. Depreciation is the process of valuation of an asset. *

True

False

9. Depreciation cannot be provided in case of loss in a financial year. *

True

False

10. Depreciation is the decline in the market value of tangible fixed assets. *

True

False

11. In diminishing balance method of depreciation, the rate per of depreciation gets reduced Every year. *

True

False

12. There is no difference between written down value method and diminishing balance Method of depreciation. *

True

False

13. In case of diminishing balance method, the assets gets reduced to zero level. *

True

False

14. It is not necessary to provide depreciation on plant and machinery when its market value Is higher than its book value. *

True

False

15. Depreciation is an non-cash expenditure. *

True

False

16. Providing depreciation reduces the amount of profit available for dividend. *

True

False

17. Providing depreciation ensures sufficient cash for the replacement of an asset. *

True

False

18. When depreciation ids credited to a Provision for Depreciation’ account, the fixed assets Appears always at cost Price in the books. *

True

False

(C) Choose the best Alternate: 1. What is the amount of difference between the closing balance of two machines after two Years is both machines were purchased on the same date with the same amount i.e., for Rs 1,00,000? Machine I is depreciated by 20% p.a. on Straight line Method and Machine II is depreciated by 20% P.a. on Diminishing Balance Method: *

Value of Machine II is more by Rs2,000

Value of Machine I is more by Rs4,000

Value of Machine II is more by Rs4,000

Value of Machine II is less by Rs2,000

2. Ambuja Cement Ltd. Purchased a machine on 1-1-2019 for Rs1,20,000. Installation expenses Were Rs10,000. Its residual value after 10 Years is Rs5,000. On 1-03-2019 expenses on its Repairs were incurred to the extent of Rs 2,000. Depreciation is provided under straight line Method. Books were closed on 31st march every year. The amount of depreciation for the Current year will be: *

Rs 3,125

Rs3,175

Rs12,500

Rs12,700

3. The balance of Machine on 31st March 2019 is Rs97,200. The Machine was Purchased on 1st April 2017. Depreciation is charged @ 10% P.a. by diminishing balance method. The cost Price of the machine as on 1st April 2017 would be: *

Rs1,00,000

Rs1,20,000

Rs1,08,000

Rs1,32,000

4. Depreciation is provided on : *

Current Assets

Intangible Assets

Fixed Assets

Fictitious Assets

5. Original cost of an assets ids Rs 1,26,000; Salvage value is Rs 6,000; Useful life is 6 years. the Rate of depreciation under Straight line Method will be: *

15.87%

16.67%

15.80%

16.56%

6. in the books of D Ltd. the Machiner Account shows a debit balance of Rs60,000 as on April 1, 2018 and Provision for Depreciation A/c at Rs24,000 the machinery was sold on September 30. 2018 for Rs30,000. The company charges depreciation @20% p.a. on diminishing balance Method. Profit/ loss on sale of the machinery is: *

Rs1,200 Profit

Rs2,400 Loss

Rs2,400 Profit

Rs 1,200 Loss

7. What will be the percentage of depreciation under SLM in the following case: Original Cost of Machine Rs 1,50,000 Salvage value after 9 years Rs 15,000 Repair charges in 2nd Rs 10,000 *

11.11%

10%

10.34%

9.37%

8. which one of the following is not a feature of written down value method of depreciation? *

The book value of the assets becomes zero at any one point of time

The depreciation is calculated on the book vale of assets ant not on the cost

The amount of depreciation charged on a specific assets reduces every year.

There is not need to estimate the residual value and estimated life at the time of Deciding the amount of depreciation

9. Which of the following best describe the “Depreciation “? *

Valuation of fixed assets at the end of the year

Verification of assets

Allocation of cost market value of assets

10. A machine was purchased on 1st April 2018 for Rs5,00,000 and on 1st October, 2018 a new Machine is added for Rs2,00,000. Calculate the balance of machine account if depreciation is Charged at 20% P.a. on written down value method for the year ending March 31, 2019. *

Rs6,00,000

Rs5,60,000

Rs6,60,000

Rs5,80,000

11. Amortisaction refers to writing off …………….. *

Depleting Assets

Wasting Assets

Intangible Assets

Fictitions Assets

12. Depreciation is calculated from the date of ……………… *

Purchase of Asset

Receipt of Assets at business premises

Asset put to use

Asset installed

13. A Ltd. Purchased a machine on 1.1.2019 for Rs1,20,000. Installation expenses were Rs30,000. Residual value after 5years Rs5,000. On 1.7. 2019, expenses for repair were Incurred to the extent of Rs2,000. Depreciation is provide @ 10% P.a. under written down Value method. Total depreciation after 2nd year *

Rs25,000

Rs13,000

Rs10,500

Rs28,500

14. The W.D.V. of an assets after three years of depreciation on reducing balance method @15% P.a. is Rs49,130 what was its original value.? *

Rs40,000

Rs80,000

Rs45,000

Rs70,250

PROBLEMS BASED ON MISSING INFORMATION Problem 1. Fill in the missing information in the machinery Account given below Depreciation is charged @ 10% P.a. on original cost Method. *

Option 1

PROBLEM 2. Fill up the missing information in the Machinery Accounts given below. You Are informed That on 30th June 2015, the company sold the first machine purchased in 2013 for Rs38,500.Depreciation is provided at 20%P.a. on the original cost each year. Accounts are closed on 31st March every year. *

Option 1

PROBLEM 3. Fill up the missing information in the Plant Account given below. Depreciation is charged at 10% P.a. on written down value method. *

Option 1

PROBLEM 4. Fill up the missing information in the plant Account given below. Depreciation was provided at 20% P.a. on the written down value method on this plant. *

Option 1

PROBLEM 5.Fill up the missing information in the Machinery Account given below. You are informed that the machine purchased on 1st October, 2016 was sold on 1st April, 2018 for Rs2,30,000. The depreciation is provided at the rate of 10% p.a. on diminishing balance method by the company. *

Option 1

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