Accountancy Quiz on Depreciation, Provisions and Reserves
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Preview questions
1. What is depreciation?
Increase in asset value · Reduction in asset value · Allocation of asset cost over time · Total loss of asset value
2. Which method of depreciation is based on the usage of the asset?
Straight Line Method · Written Down Value Method · Units of Production Method · Sum of Years' Digits Method
3. What is the main purpose of creating a provision?
To increase profits · To meet future liabilities · To reduce expenses · To enhance asset value
4. Which of the following is NOT a type of reserve?
General Reserve · Specific Reserve · Capital Reserve · Income Reserve
5. What is the effect of depreciation on the profit and loss account?
Increases net profit · Decreases net profit · No effect · Increases gross profit
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