CBSE Class 11 Accountancy Depreciation Worksheet

CBSE Class 11 Accountancy Chapter 7 Depreciation, Provisions and Reserves Fill In The Blanks

Question. The accumulated depreciation of the asset is Rs.50,000 as on 1.4.17. The original cost of the asset is Rs. 1,00,000. _____________is the amount of depreciation to be charged under diminishing balance method @10%p.a for the year ended 31.3.18.
Answer. 5000

Question. On 31.3.18 the balance in land account stood at Rs.1,00,000. The company charged depreciation at the rate of 10%on fixed assets under SLM. The amount of depreciation would be ___________.
Answer. Nil

Question. After charging depreciation for 3 years @10%p.a under WDV method, the book value of machinery is 87,480. The original cost of that machinery is __________.
Answer. 1,20,000

Question. The depletion amount of mining rights, if the mine is acquired for Rs,10,00,000 and for 5years is __________.
Answer. 2,00,000

Question. The depreciable cost of an asset is Rs. 85,000 and the acquisition cost of the asset was Rs. 1,00,000, then the scrap value of the asset will be Rs. ______.
Answer. 15,000

Question. Depreciation is the _____ in the value of fixed assets.
Answer. Reduction

Question. The existence and the amount of _______ reserve is not disclosed in the Balance Sheet.
Answer. Secret Reserve

Question. Provision is a ________ against profit.
Answer. charge

Question. Creation of reserves reduces the taxable -------------of the business.
Answer. profit

Question. The Secret Reserve can be merged with the profit during the ______.
Answer. lean period

Question. The main objective of provision are to account all __________and ___________ .
Answer. Expenses and losses

CBSE Class 11 Accountancy Chapter 7 Depreciation, Provisions and Reserves True And False

1. In the year of Loss, depreciation should not be provided on the asset. (False)
2. The depreciation is calculated on the market value of the asset under Original Cost Method. (False)
3. The patents, copyrights and loose tools, their value after their agreement governing their use in business comes to an end after the expiry of predetermined period. (True)
4. A car which has been repaired after an accident will fetch the same price n the market even if it has not been used. (False)
5. Asset Disposal account is generally used when a part of an asset is sold. (True)
6. Patents do not depreciate. (True)
7. Good debtors are those from whom collection of debts is certain. (True)
8. Depreciation is charged on all tangible assets. (False)
9. Amortisation refers to writing off fictitious assets. (False)
10. A reserve can be either a general or specific reserve. (True)
11. Provision can be invested outside the business. (False)
12. Creation of provision is necessary as per law. (True)

CBSE Class 11 Accountancy Chapter 7 Depreciation, Provisions and Reserves MCQs

Question. What is the amount of difference between the closing Balance of 2 machines after 2 years , if both the machine were purchased on the same date and with the same amount i.e., Rs.2,00,000.Machine I is depreciated by 10% p. a. under Straight Line Method and Machine II is depreciated by 10%p.a. on Written Down value Method:
a. Both Value will be equal
b. Value of Machinery II is more by Rs.2,000
c. Value of Machinery I is more by Rs.4,000
d. Value of Machinery II is more by Rs.4,000 Ana
Answer. B

Question. Charging Depreciation is
a. Compulsory
b. Voluntary
c. Depending upon the condition of an asset
d. None of the above Rem
Answer. A

Question. An asset was purchased for Rs.2,50,000 and as per Reducing Balance Method , 20 % p.a. depreciation is charged . What is the value of Asset at the end of three years
a. Rs.1,28,000
b. Rs.1,54,000
c. Rs. 1,23,000
d. Rs. 1,00,000 APP
Answer. A

Question. Which Method is not recognised by Income Tax Authority
a) Written down value Method
b) Diminishing Balance Method
c) Fixed Installment Method
d) All of the above Rem
Answer. C

Question. Book value is the basis of charging Depreciation under Which method.
a) Written down value Method
b) Straight line Method
c) Fixed Installment Method
d) All of the above Rem
Answer. A

Question. Name the method of Depreciation which assumes that the asset is depreciated more in the earlier year and less in the later year of its life.
a) Straight Line Method
b) Written Down Method
c) Both a. and b.
d) None of these Ana
Answer. B

Question. The book value of machinery on the date of sale is Rs. 45000. The original price of it was Rs. 85,000. The company sold it at a loss of Rs.7,000. What is the sale proceed?
a) Rs.92,000
b) Rs.78,000
c) Rs.52,000
d) Rs. 38,000 APP
Answer. D

Question. The book value of machinery on the date of sale is Rs. 45000. The original price of it was Rs. 85,000. The company sold it at a profit of Rs.7,000. What is the sale proceed?
a) Rs.92,000
b) Rs.78,000
c) Rs.52,000
d) Rs. 38,000 APP
Answer. C

Question. Capital Redemption Reserve is:
a. General Reserve
b. Specific reserve
c. Revenue Reserve
Answer. B

Question.Provision is created to meet for:
a. Known liability
b. Known Asset
c. Known Amount.
Answer. A

Question. It is shown under the heading of Reserve &Surplus on the liability side of the Balance sheet:
a. Short term Loan
b. General Reserve
c. Provision for Repairs
Answer. B

Question. Creating Reserve is important because it helps in
a. Meeting the future contingencies
b. Strengthening the Financial position of the business
c. Both a. and b
d. None of these
Answer. C

Question. Reserves Created for a particular purpose are known as
a. General Reserve
b. Secret Reserve
c. Specific Reserve
d. Capital Reserve
Answer. C

Question. For creating a provision for doubtful debt, Profit and Loss account is to be:
a. Debited
b. Credited
c. None of the above
Answer. A

Question. It is the physical life of an asset that matters for the purpose of depreciation.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. B

Question. Total amount of depreciation charged over the useful life of the asset must be equal to the depreciable cost.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. A

Question. ……….. of an asset is the estimated economic or commercial life of the asset.
(a) Useful life
(b) Physical life
(c) Residual life
(d) None of these
Answer. A

Question. A machine is purchased for Rs 50,000 and is expected to have a useful life of 10 years. At the end of 10th year it is expected to have a sale value of Rs 6,000 but expenses related to its disposal are estimated at Rs 1,000. Then its depreciable cost is
(a) Rs45,000
(b) Rs50,000
(c) Rs44,000
(d) None of these
Answer. A

Question. Which of the following factors affect the useful life of an asset?
(i) Legal or contractual limits
(ii) Repair and maintenance policy of the business organisation
(iii) Technological obsolescence
(iv) The number of shifts for which asset is to be used
(a) Only (i)
(b) (i) and (iii)
(c) (i), (iii) and (iv)
(d) (i), (ii), (iii), (iv)
Answer. D

Question. Under ……………….. method, a fixed and equal amount in the form of depreciation is charged every year during the life time of the asset.
(a) straight line
(b) written down value
(c) annuity
(d) insurance policy
Answer. A

Question. The original cost of the asset is Rs 2,50,000 and freight and installation charges are Rs 25,000. The useful life of the asset is 10 years and net residual value is estimated to be Rs 50,000. What is the amount of depreciation to be charged every year under straight line method assuming that the asset is purchased on 1st January, 2021?
(a) Rs22,500
(b) Rs25,000
(c) Rs30,000
(d) None of these
Answer. A

Question. Which of the following are advantages of straight line method of depreciation?
(a) It is very simple, easy to understand and apply.
(b) This method makes it possible to distribute full depreciable cost over useful life of the asset.
(c) Both (a) and (b)
(d) None of the above
Answer. C

Question. Straight line method is based on the faulty assumption of same amount of the utility of an asset in different accounting years.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. A

Question. Which of the following is\are limitations of straight line method?
(a) This method reduces the book value of an asset to zero although the asset may still be in existence.
(b) It is a very simple method.
(c) Depreciation charged is same every year making comparison of profits for different years easy.
(d) All of the above
Answer. A

Question. Under ……………….. method, depreciation is charged on the book value of the asset.
(a) straight line
(b) written down value
(c) annuity
(d) insurance policy
Answer. B

Question. In straight line method of depreciation, amount of depreciation reduces year after year.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. B

Question. If the original cost of the asset is Rs 2,00,000 and depreciation is charged @ 10% p.a. at written down value, then the amount of depreciation for 1st, 2nd and 3rd year respectively is
(a) Rs20,000;Rs18,000;Rs16,200
(b) Rs18,000;Rs16,200;Rs14,500
(c) Rs20,000;Rs20,000;Rs20,000
(d) None of the above
Answer. A

Question. Which of the following is/are the advantage(s) of written down value method?
(a) It results into almost equal burden of depreciation and repair expenses taken together every year on profit and loss account
(b) Income Tax Act accept this method for tax purposes
(c) As a large portion of cost is written-off in earlier years, loss due to obsolescence gets reduced
(d) All of the above
Answer. D

Question. Written down value method is based on a more realistic assumption that the benefits from asset go on diminishing with the passage of time.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. A

Question. Which of the following is/are limitations of written down value method?
(i) As depreciation is calculated at fixed percentage of written down value, depreciable cost of the asset cannot be fully written-off.
(ii) It is difficult to ascertain a suitable rate of depreciation.
(a) Only (i)
(b) Only (ii)
(c) Both (i) and (ii)
(d) Neither (i) nor (ii)
Answer. C

Question. Which of the following does not correctly differentiate between straight line and written down value method?
(a) In written down value method, depreciation is charged on the basis of original cost whereas in straight line method, the basis of charging depreciation is net book value.
(b) The annual amount of depreciation charged every year remains fixed or constant under straight line method whereas in written down value method, the annual amount of depreciation is highest in the first year and subsequently declines.
(c) Straight line method is not recognised by Income tax law while written down value method is recognised by the income tax law.
(d) None of the above
Answer. A

Question. Straight line method is suitable for assets in which
(a) repair charges are low.
(b) the possibility of obsolescence is low.
(c) scrap value depends upon the time period involved.
(d) All of the above
Answer. D

Question. Written down value method is suitable for assets which are affected by technological changes and require more repair expenses with passage of time.
(a) True
(b) False
(c) Can’t say
(d) Partially true
Answer. A

Question. XYZ Ltd. purchased a plant for Rs 5,00,000 on 1st April, 2020, and spent Rs 50,000 for its installation. The salvage value of the plant after its useful life of 10 years is estimated to be Rs 10,000. Pass journal entry for depreciation on 31st March, 2021.
(a) Depreciation A/c Dr 54,000
To Plant A/c 54,000
(b) Plant A/c Dr 54,000
To Depreciation A/c 54,000
(c) Depreciation A/c Dr 50,000
To Plant A/c 50,000
(d) None of the above 
Answer. A

Question. M/sMehra and Sons acquired amachine for Rs 1,80,000 on 1st October, 2020, and spent Rs 20,000 for its installation. The firm writes-off depreciation at the rate of 10% on original cost every year. What is the journal entry for charging depreciation to profit and loss account on 31st March, 2021?
(a) Profit and Loss A/c Dr 10,000
To Depreciation A/c 10,000
(b) Profit and Loss A/c Dr 9,000
To Depreciation A/c 9,000
(c) Depreciation A/c Dr 10,000
To Plant A/c 10,000
(d) None of the above
Answer. A

Question. What is the journal entry for crediting depreciation amount to provision for depreciation account?
(a) Depreciation A/c Dr
To Provision for Depreciation A/c
(b) Provision for Depreciation A/c Dr
To Depreciation A/c
(c) Depreciation A/c Dr
To Asset A/c
(d) None of the above
Answer. A

Question. Which of the following is/are feature(s) of accumulated depreciation account method?
(i) Asset account continues to appear at its original cost year after year over its entire life.
(ii) Depreciation is accumulated on a separate account instead of being adjusted in the asset account at the end of each accounting period.
(a) Only (i)
(b) Only (ii)
(c) Both (i) and (ii)
(d) Neither (i) nor (ii)
Answer. C

Question. In the Balance sheet, provision for depreciation of Rs 20,000 is shown on
(a) the liabilities side of the balance sheet.
(b) by way of deduction from the original cost of the asset concerned on the asset side of the balance sheet.
(c) Either (a) or (b)
(d) None of the above
Answer. C

Question. The amount set aside for the purpose of providing any known liability, the amount of which cannot be ascertained with reasonable accuracy, is known as
(a) Reserve
(b) Provision
(c) Contingency fund
(d) None of these
Answer. B

CBSE Class 11 Accountancy Chapter 7 Depreciation, Provisions and Reserves MatchThe Following

Question.
i) April 1, 2016, a machinery was                  a. Rs. 14,000
purchased for Rs.1,00,000. Rate of
Depreciation Charged @ 12% p.a.
under Straight line method. The book
value on May 31,2017 would be
ii) Original Cost of a machinery sold for         b. Rs.86,000
Rs.86,000 was Rs.1,20,000. The book
value on the date when the
machinery was sold is Rs.1,00,000.
calculate the total amount of depreciation
on machinery sold.
                                                                      c. Rs.34,000
Answer. 1-b; 2-c

Question.
i) Obsolescence does not arises due to                        a. Change in the demand of a product made by such asset
ii) Abnormal factor causing depreciation include           b. Technological changes
                                                                                       c. Sudden natural disaster
                                                                                       d. Improvement in the production method
Answer. 1-c; 2-c

Question.
i) Depreciation Helps in determining            a. Helps to increase the value of the asset
ii) The Asset which is an exception from      b. Accurate level of profit
depreciation 
                                                                     c. Furniture
                                                                     d. Land
Answer. i-b; ii-d

Question.
i) Cost of depreciation remains constant                  a. Fixed installment Method
ii) Concept used for calculating depreciation is         b. Diminishing balance method
                                                                                  c. Matching concept
                                                                                  d. Prudence concept
Answer. i-a; ii-c

Question.
i) It can be used for distribution of dividends        a) Capital Redemption reserve
without any pre conditions
ii) It can be used for distribution of dividends        b) Revenue Reserve
only if the company satisfies certain conditions
prescribed by the companies
                                                                             c) Capital Reserve
Answer. i)-b; ii)-c

Question.
i) It is created for meeting Capital Losses                    a) Provision
or to be used for purpose specified by the 
Companies
ii) It is created for strengthening the financial              b) General Reserve
position and meeting the unforeseen contingencies
                                                                                    c) Revenue Reserve
                                                                                    d) Capital Reserve
Answer. i)-d; ii)- c

 Chapter Name: DEPRECIATION

1 On 1.1.2010 an asset was purchased for ₹ 35000. The estimated life of the asset is 5 years after which its breakup value will be ₹ 5000 only. Prepare the asset account for the first three years, by straight line method assuming that the books are closed on 31st December.

2 Good Manufacturer Ltd. acquired a machine on 1st July 2011, at a cost of ₹ 25000 and spent ₹1000 on its installation. The firm writes off depreciation at 10% of the original cost every year. Show the machinery account for three years. The books are closed on 31st December.

3 A firm purchased machinery at a cost of ₹ 46000 on 1st October, 2011 and incurred ₹4000 as expenses on its purchase and installation. The rate of depreciation under straight line method is 10% p.a. The firm closes its books on 31st December, each year. On 1st July, 2012, another machine worth ₹ 20000 was purchased. Prepare Machinery account for 2011, 2012 and 2013.

4 A limited company purchased on 1st January 2010 a small plant for ₹10000. On 1st July, in the same year additional plant was purchased costing ₹5000. On 1st July, 2011, the plant purchased on 1st January 2010 having become obsolete is sold off for ₹4000. On 1st July 2012, a fresh plant was purchased for ₹12000 and the plant purchased on 1st July, 2011 was sold for ₹4200. Depreciation is provided at 10% p.a. on SLM every year. Show Machinery Account for 3 years.

5 On 1.4.2011, XYZ Ltd. purchased a second hand machine for ₹ 80000 and spent ₹ 20000 on its cartage, repairs and installation. The residual value at the end of its expected useful life of 4 years is estimated at ₹40000. On 30th Sept. 2012, repairs and renewals amounted to ₹2000. On 30th Sept. 2013, this machine is sold for ₹50000. Depreciation is to be provided according to straight line method. Prepare Machinery account for first three years assuming that the accounts are closed on 31st March each year.

6 X Ltd. purchased second hand machinery on .1.1. 2001 for ₹ 40000. On 1st July 2002, it purchased another machine for ₹10000 and on July 1, 2003 sold off the first machine purchased in 2001 for ₹28000; on the same date it purchased a machinery for ₹25000.on 1st July 2004, the second machinery purchased for ₹10000 was also sold off for ₹2000. Depreciation was provided on the Machinery at a rate of 10% on the original cost annually on 31st December. Prepare Machinery account commencing from January 1st, 2001.

7 On 1st January 2011, X Ltd. purchased a machinery for ₹ 60000. On 1st July, 2011 an additional machinery costing ₹ 20000 was purchased. On 1st July, 2003, the machine purchased on 1.1.2011 was sold for ₹28600 and on the same date, a new machine was purchased at a cost of ₹40000. Show the Machinery account for the first four years according to Diminishing Balance method, rate of depreciation 10% p.a.

8 On 1.1.2008, Kiran purchased 5 machines for ₹15000 each. They sold on 1.1.2009 one machine for ₹12500. They decided to write off depreciation @10% on the straight line method. Prepare Machine account, provision for depreciation account and machine disposal account for two years assuming that accounts are closed on 31st December every year.

9 Sam Ltd. purchased on 1.4.2004 a small plant for ₹100000. On 1st October, 2004 an additional plant was purchased costing ₹50000. On 1st October, 2005 the plant purchased on 1.4.2004, having become obsolete, was sold for ₹40000. Depreciation is provided @ 10% per annum on the original cost on 31st March every year. Show Plant account, Plant disposal account and Provision for depreciation account for the years 2004-05 and 2005-06.

10 On 1.4.2003, Manish Ltd purchased a machinery for ₹1200000. On 1st October 2005, a part of the machinery purchased on April 1, 2003 for ₹80000 was sold for ₹45000 and new machinery at cost of ₹158000 was purchased and installed on the same date. The company has decided to provide 10% p.a. as depreciation .Show the necessary ledger accounts assuming that the accounting year ends on 31st March if:

a) Depreciation is provided under SLM and is credited to asset account

b) Depreciation is provided under WDV and is credited to asset account

c) Depreciation is provided under SLM and is credited to provision for depreciation account

d) Depreciation is provided under WDV and is credited to provision for depreciation account

11 On 1.1.2010, Darshan Ltd. purchased from Rohan Ltd. a plant costing ₹400000 on installment basis payable as follows:

On 1.1.2010 100000

On 1.7.2010 100000

On 1.1.2011 100000

On 1.1.2012 100000

The company spent ₹10000 on transportation and installation of the plant. It was decided to provide for depreciation on the straight line method. Useful life of the plant was estimated at 5 years. It was also estimated that at the end of the useful life, realizable value of the plant would be ₹12000 (gross) and dismantling cost of plant, to be paid by company was estimated at ₹2000. The plant was destroyed by fire on 31st December 2013 and an insurance claim of ₹50000 was admitted by the insurance company. Prepare Plant account, Accumulated depreciation account and Plant disposal account assuming that the company closes its book on 31st every year.

12 You are given the following balances as on 1.4.2005

Machinery account ₹50,000 and Provision for depreciation account ₹11600 Depreciation is charged on machinery @ 20% p.a. by WDV Method. A piece of machinery purchased on 1.4.2003 for ₹10000 was sold on 1st October, 2005 for ₹6000. Prepare Machinery account, Provision for Depreciation Account and Machinery Disposal account for the year ended 31.3.2006

13 What is depreciation? What are its causes?

14 Distinguish between provision and reserve.

15 Distinguish between straight line method and diminishing balance method of calculating depreciation.

16 State briefly the need for providing depreciation.

17 Explain the following terms:

a) Depletion

b) Obsolescence

c) Amortisation

18 Distinguish between Revenue reserve and Capital reserve. Give examples for capital reserve and revenue reserve

Please click on below link to download CBSE Class 11 Accountancy Depreciation Worksheet