A-AS Level (CIE) Accounting Paper-1: Specimen Questions with Answers 21 - 22 of 93

Question 21

Question

MCQ▾

Depreciation is provided on

Choices

Choice (4)

a.

Current Assets

b.

Investments

c.

Fictitious Assets

d.

Fixed Assets

Answer

c.

Explanation

In every business there are certain assets of a fixed nature that are needed for the conduct of business operations. Some examples of such assets are Building, Plant and Machinery, Motor Vehicles, Furniture, Office equipment՚s etc. These fixed assets have a fixed span of life after their expiration the assets lose their usefulness for the conduct of business operations. Reduction in the value and utility of such assets due to their constant use and expiry of time is termed as depreciation. Thus, it is the process of cost allocation of a fixed asset over its useful life is known as depreciation.

Special features or characteristics of Depreciation:

  • Depreciation is decline in the value of fixed assets (except Land) .
  • Depreciation is a gradual and continuing process because the value of the assets will decline either by their constant use er obsolescence due to expiry of time.

Question 22

Question

MCQ▾

The balance on the debit side of the bank column in Cash Book indicates:

Choices

Choice (4)

a.

Bank overdraft

b.

The total amount withdrawn from the bank

c.

The total amount deposited in the bank

d.

Cash at bank

Answer

d.

Explanation

Meaning and Importance: This book is used to record all transactions relating to cash receipts and cash payments. The number of cash transactions is quite large in every business and it is quite impracticable and inconvenient to record all cash transactions in the journal. It is, therefore, necessary to maintain a separate book for cash transactions. Cash book helps a businessman to know the cash in hand and cash at bank balance at any point of time. It also provides information about the receipts, payments, and the closing balance of cash at the end of each day. Hence, this is a very popular book and is maintained by all the organizations - big or small.

🎯 Select Paper

Developed by: