What is depreciation? Cost of a fixed asset Cost of a fixed asset’s repair The residual value of a fixed asset Correct! Wrong! Under which depreciation method the amount of depreciation expenses remains same throughout the useful life of a fixed asset Straight line method Reducing balance method Machine hours method Correct! Wrong! What is the accumulated deprecation? Sum of all depreciation expenses of a fixed asset Depreciation expenses Cost of depletion of assets Correct! Wrong! Which of the following is the normal balance of an accumulated depreciation account? Debit balance Credit balance Nil balance Correct! Wrong! How trial balance shows the accumulated depreciation? as a debit item as a credit item It doesn’t show Correct! Wrong! Which of the following is a double entry for depreciation expenses? Accumulated depreciation debit and depreciation expenses Credit Depreciation expenses Debit and accumulated depreciation Credit Cash Debit and depreciation expenses Credi Correct! Wrong! An alternative term used for accumulated depreciation expenses? Provision for depreciation Cumulative depreciation Targeted depreciation Correct! Wrong! Which of the following is/are a kind of depreciation expenses? Amortization Depletion Both of them Correct! Wrong! In depreciation calculation, the useful life of a fixed asset is: a certain figure an estimate a predetermined figure for all fixed assets Correct! Wrong! Depreciable amount + Residual value of a fixed asset =? Depreciation expenses Accumulated depreciation Cost of the fixed asset Correct! Wrong! Cost of a fixed asset – Accumulated depreciation expenses of the fixed asset=? Book value of a fixed asset Market value of a fixed asset Historical cost of a fixed asset Correct! Wrong! The estimate about useful life of a fixed asset: Can never be changed Can be changed Depend upon the situation Correct! Wrong! The purchase price of a software that will be used for more than 12 months should be regarded as: a revenue expenditure a capital expenditure a long term expense Correct! Wrong! PAK- firm has imported a machine from abroad. Which of the following is NOT the element of machine’s cost? Purchase price of machine Import duty Refundable tax Correct! Wrong! Which of the following fixed assets is not depreciated in the ordinary circumstances? Plant and machinery Building Land Correct! Wrong! In the calculation of depreciation, all of the following items are actually estimates except: Useful life Residual value Historical cost Correct! Wrong! Which of the following accounting concepts or principles require the calculation of depreciation of the fixed assets? Prudence concept Accrual concept Matching concept Correct! Wrong! Under which method of depreciation the amount of depreciation expenses remains constant throughout the useful life of a fixed asset Reducing balance method Unit of activity method Straight line method Correct! Wrong! An increase in the value of fixed asset is referred to as: Depreciation Appreciation Market capitalization Correct! Wrong! The term ______ is generally used for the depreciation of natural resources Amortization Depletion Appreciation Correct! Wrong!