IGCSE Accounting Paper-1: Specimen Questions with Answers 233 - 234 of 338
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Question 233
Question
MCQ▾Find out the missing value of liabilities using the concept of accounting equation from the data given below: (Marks 1)
| $ | |
| Furniture | 1000 |
| Cash | 1200 |
| Debtors | 150 |
| Inventory | 50 |
| Capital | 1500 |
| Liabilities | ? |
Choices
| Choice (4) | |
|---|---|
a. | $ 500 |
b. | $ 550 |
c. | $ 900 |
d. | $ 3900 |
Answer
c.Explanation
Or
Question 234
Write in Short
Short Answer▾Name the depreciation method described by each of the following statements: (Marks 4)
| Description | Depreciation Method |
| A fixed percent of depreciation is charged every year on reduced balance of the asset | |
| A fixed percentage of the original cost of asset is charged every year as depreciation | |
| Rate of depreciation is based on estimated life of an asset in hours. | |
| Depreciating wasting assets like mines, quarries etc. on the basis of obtained output |
Explanation
| Description | Depreciation Method |
| A fixed percent of depreciation is charged every year on reduced balance of the asset | Diminishing Balance Method |
| A fixed percentage of the original cost of asset is charged every year as depreciation | Straight Line Method |
| Rate of depreciation is based on estimated life of an asset in hours | Production hour Method |
| Depreciating wasting assets like mines, quarries etc. on the basis of physical units of obtained output | Production Unit Method |
Explanation:
- Under Diminishing Balance Method, a fixed percentage of depreciation is charged every year on reduced balance of the asset i.e.. the balance b/d of the asset each year. This is why every next year, the amount of depreciation also goes on decreasing.
- Under Straight Line Method, this method, a fixed percentage of the cost of the asset is written off every year to reduce the value of the asset to zero or to its scrap value. The amount of depreciation remains constant for every year.
- Under Production Hour Method, a fixed rate of depreciation per hour is calculated by dividing the value of the assets with the estimated life of the asset in production hours.
- Under Production Unit Method, a fixed rate of depreciation per unit of output is calculated by dividing the value of the assets with the physical units of output. This method is mainly used for depreciating wasting assets like mines, quarries etc.