Depreciation is decline in the value of ________.

1

(a)

Assets

Installation, freight and transport expenses are a part of __________.

1

(a)

Acquisition cost

Provision is a _________ against profit.

1

(a)

Charge

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

1

(a)

Dividend equalisation fund

Depreciation is also a non-cash expense.

1

(a) True

(b) False

Depreciation is also charged on current assets.

1

(a) True

(b) False

Dividend equalisation reserve is an example of general reserve.

1

(a) True

(b) False

General reserve can be used only for some specific purposes.

1

(a) True

(b) False

Provision is a charge against profit.

1

(a) True

(b) False

Creation of reserve reduces taxable profits of the business.

1

(a) True

(b) False

What is meant by Depreciation?

1

(a)

Name the accounting standard which governs depreciation.

1

(a)

AS-6

What is meant by Depletion?

1

(a)

Depletion is the term used for exhaustion of natural resources.

What is meant by Amortisation?

1

(a)

Amortisation means writing down the intangible assets such as patents, copyrights, trademarks.

What is meant by obsolescence?

1

(a)

Obsolescence means reduction in the value of the asset due to technological changes.

What is the purpose of general reserve?

2

(a)

To meet unforeseen losses and liabilities and to improve overall financial position of an enterprise.

What is specific reserve?

2

(a)

Specific reserve is the reserve which is created for a specific purpose.

Give two examples of specific reserves

2

(a)

(i) Debenture Redemption Reserve
(ii) Dividend Equalisation Reserve.

Name the reserve that can be used in distribution of dividend.

2

(a)

Dividend Equalisation Reserve.

What is meant by capital reserve?

2

(a)

Capital reserve is a reserve which is created out of capital profits.

How can we calculate Depreciation?

3

(a)

What is Depletion?

3

(a)

What is Amortisation?

3

(a)

What is Obsolescence?

3

(a)

What is Depreciation?

3

(a)

1. Determine the missing information in the following accounts, if depreciation is to be charged @ 10% p.a. as per Straight Line Method:

   Dr. Machinery Account Cr.

   Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
   2015				2016
   April 1	To Bank A/c		3,00,000	March 31	By Balance c/d		.... (1) ....
   			.... (2) ....				.... (3) ....
   2016				2016
   April 1	To Balance b/d		.... (4) ....	April 1	By Machinery Disposal A/c		60,000
   				2017
   				March 31	By Balance c/d		... (5) ....
   			3,00,000				3,00,000

   Dr. Provision For Depreciation Account Cr.

   Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
   2016				2016
   March 31	To Balance c/d		... (6) ...	March 31	By Depreciation A/c		.... (7) ....
   			.... (8) ....				.... (9) ....
   2016				2016
   April 1	To ...(10)...		.... (11) ....	April 1	By Balance b/d		.... (12) ....
   2017				2017
   March 31	To Balance c/d		48,000	March 31	By Depreciation A/c		24,000
   			54,000				54,000

   Dr. Machinery Disposal Account Cr.

   Date	Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
   2015				2016
   April 1	To Machinery A/c		.... (13) ....	April 1	By Provision for		6,000
   				April 1	By Depreciation A/c
   				April 1	By Bank A/c (Sales)		50,000
   					By ...(14)...		.... (15) ....
   			60,000				60,000

   5

   (a)

2. An asset is purchased for Rs.,10,000. Depreciation is to be provided annually according to the straight line method. The useful life of the asset is 10 years and the residual value is Rs.10,000. You are required to find out the amount of annual depreciation and prepare asset account for the first three years.

   5

   (a)

1. A company writes off depreciation on straight line basis on machinery at 10%. On 31st March, 2013 the position was as under :

   Particulars	Rs.
   Cost of purchase to date	52,590
   Depreciation written off to date	25,670

   During 2013-14 an addition of Rs.2,480 was made to machinery. A machine bought in 2009-10 for Rs. 2,800 was sold for Rs. 800 during the year.
   You are required to show the Machinery Account for the year 2013-14. (Show your workings fully).

   5

   (a)