Explain determinants of the amount of depreciation.
Factors that determining the Amount of Depreciation are as follows:-
1) Original cost of the asset: It implies the cost incurred on its acquisition, installation, commissioning and for additions or improvements thereof which are of capital nature. The cost of asset include the purchase price, less any trade discount plus all the costs essential to bring the asset to a usable condition
2) Estimated life: It implies the period over which an asset is expected to be used. Useful life refers to the window of time that a company plans to use an asset. Useful life can be expressed in years, months, working hours, or units produced. Therefore, the useful life of an asset is generally to be taken in terms of asset’s expected use. This estimated useful life of an asset determines the rate or the amount of depreciation.
3) Residual value: It implies the value expected to be realized on its sale on the expiry of its useful life. This is otherwise known as scrap value or turn-in value. It is the amount of money the company expects to recover, less disposal costs, on the date the asset is scrapped, sold, or traded in. Depreciation should be determined after deducting the estimated scrap value from the cost of the asset.
State whether the following statements are true or false:
State briefly the need for providing depreciation.
Give four examples each of ‘revenue reserve’ and ‘capital reserves’.
Give four examples each of ‘provision’ and ‘reserves’.
Explain the concept of depreciation. What is the need for charging depreciation and what are the causes of depreciation?
What are the effects of depreciation on profit and loss account and balance sheet?
Name and explain different types of reserves in detail.
State with reasons whether the following statements are True or False ;
(i) Making excessive provision for doubtful debits builds up the secret reserve in the business.
(ii) Capital reserves are normally created out of free or distributable profits.
(iii) Dividend equalisation reserve is an example of general reserve.
(iv) General reserve can be used only for some specific purposes.
(v) ‘Provision’ is a charge against profit.
(vi) Reserves are created to meet future expenses or losses the amount of which is not certain.
(vii) Creation of reserve reduces taxable profits of the business.
Discuss in detail the straight line method and written down value method of depreciation. Distinguish between the two and also give situations where they are useful.
Basaria Confectioner bought a cold storage plant on July 01, 2014 for ₹ 1,00,000. Compare the amount of depreciation charged for first three years using:
Name any two types of commonly used negotiable instruments.
Why is it necessary to record the adjusting entries in the preparation of final accounts?
State the meaning of incomplete records?
Briefly state how the cash book is both journal and a ledger.
State the meaning of a trial balance?
State the four basic requirements of a database applications.
Define accounting.
State the different elements of a computer system.
Why is it necessary for accountants to assume that business entity will remain a going concern?
State the need for the preparation of bank reconciliation statement?
What kinds of errors would cause differences in the trial balance. Also list examples that would not be revealed by a trial balance?
Total of these transactions is posted in purchase account :
(i) Purchase of furniture
(ii) Cash and credit purchase
(iii) Purchases return
(iv) Purchase of stationery
A concept that a business enterprise will not be sold or liquidated in the near future is known as :
(a) Going concern
(b) Economic entity
(c) Monetary unit
(d) None of the above
Fill in the correct words :
1. The user oriented programmes designed and developed for performing certain specific tasks are called as ...........
2. Language syntax is checked by software called as ...........
3. The people who write programmes to implement the data processing system design are called as ...........
4. ........... is the brain of the computer.
5. ........... and ........... are two of the important requirements of an accounting report.
6. An example of responsibility report is ...........
Select Right Answer:
Voucher is prepared for:
(i) Cash received and paid
(ii) Cash/Credit sales
(iii) Cash/Credit purchase
(iv) All of the above
A sequence of actions taken to transform the data into decision useful information is called.......
State the relationship between information and decision.
What is petty cash book? Write the advantages of petty cash book?
What are the methods of preparing trial balance?
The periodic total of purchases return journal is posted to :
(i) Purchase account
(ii) Profit and loss account
(iii) Purchase returns account
(iv) Furniture account