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List of Depreciation MCQs
1. Define Depreciation?
A. An increase in the value of an asset over time.

B. Resource diminishes over the long run because of utilization.
C. Assets that can quickly be turned into cash.
D. Possession of assets over liabilities.
Answer: B) Resource diminishes over the long run because of utilization.
Explanation:
Depreciation, for example, an abatement in a resource's worth, might be brought

about by various elements also, negative economic situations, and so forth
Apparatus, hardware, money are a few instances of resources that are probably
going to devalue throughout a particular timeframe. The inverse of devaluation is
an appreciation which is an expansion in the worth of a resource throughout
some period.
Discuss this Question
2. What is the principal objective of Depreciation?
A. Show last year's profit.

B. Show records to Income Tax Department.
C. To get a tax rebate.
D. To calculate net profit.
Answer: D) To calculate net profit
Explanation:
The primary target of giving depreciation is to ascertain the genuine benefit and
give assets to the substitution of fixed resources.

3. What causes Depreciation?
A. Loss of goods
B. Purchase of Goods
C. Increased Liability
D. Wear & Tear
Answer: D) Wear & Tear
Explanation:
Any resource will bit by bit separate over a specific utilization period, as parts
wear out and should be supplanted. At last, the resource can don't be fixed and
should be discarded. This reason is generally normal for creation gear, which
regularly has a maker's suggested life range that depends on a specific number
of units delivered. Different resources, like structures, can be fixed and updated
for significant periods.
4. What is the reason behind making a provision for depreciation in

accounts?
A. To show the current value of assets

B. To show current liabilities
C. To charge the cost of assets against profits
D. To purchase new assets
Answer: C) To charge the cost of assets against profits
Explanation:
A depreciation arrangement can make an organization's accounting report all the

more precisely mirror the current worth of the ventures it has made in fixed
resources over the long haul.
5. The Depreciation remains constant according to which method?
A. Sum of years digit

B. Units of production
C. Declining Balance
D. Straight Line Method
Answer: D) Straight Line Method
Explanation:
It is the least difficult method for working out the deficiency of worth of a
resource after some time. The straight-line is determined by splitting the
distinction between a resource's expense and its normal rescue esteem by the
number of years it is relied upon to be utilized.
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6. What is Depreciable Value?
A. The combined cost of purchase and installation of an asset can be

depreciated minus its salvage value.
B. The worth of a physical asset's components when the asset itself is deemed
no longer usable.
C. Represents the value of a company according to the stock market.
D. The estimated resale value of an asset at the end of its useful life.
Answer: A) The combined cost of purchase and installation of an asset can be

depreciated minus its salvage value
Explanation:
The depreciable worth of the resource is the joined expense of procurement and
establishment of a resource that can be devalued shortly its rescue esteem.
7. What is Scrap Value?

no longer usable
C. Represents the value of a company according to the stock market
D. The estimated resale value of an asset at the end of its useful life
Answer: B) The worth of a physical asset's components when the asset itself is
deemed no longer usable
Explanation:
Scrap esteem is the value of an actual resource's singular parts when the actual
resource is considered at this point not usable. The singular parts, known as
scrap, merit something on the off chance that they can be put to different
employments. Here and there scrap materials can be utilized with no guarantees
and on different occasions, they should be handled before they can be reused.
8. Define Market Value?

no longer usable
C. Represents the value of a company according to the stock market
D. The estimated resale value of an asset at the end of its useful life
Answer: C) Represents the value of a company according to the stock market
Explanation:
The market esteem addresses the worth of an organization as indicated by the

securities exchange. It is the value a resource would get in the commercial centre.
With regards to organizations, market esteem is equivalent to showcase
capitalization. It is a dollar sum processed dependent on the current market cost
of the organization's portions.
9. What is Salvage Value?

depreciated minus its salvage value.
no longer usable.
C. Represents the value of a company according to the stock market.
D. The estimated resale value of an asset at the end of its useful life.
Answer: D) The estimated resale value of an asset at the end of its useful life.
Explanation:
Salvage Value is the assessed resale worth of a resource toward the finish of its
helpful life. It is deducted from the expense of a proper resource for deciding
how much the resource cost will be devalued. Accordingly, rescue esteem is
utilized as a part of the deterioration computation.
10. What is Fixed Instalment Method?
A. The amount of depreciation each year is fixed and equal.

B. Way to work out the loss of value of an asset over time.
C. System of recording larger depreciation expenses during the earlier years.
D. An accelerated method for calculating an asset's depreciation.
Answer: A) The amount of depreciation each year is fixed and equal.
Explanation:
This is the most seasoned and most broadly utilized technique for devaluation. A
proper measure of devaluation is charged each year during the lifetime of the
resource. Toward the finish of the resource's helpful life (e.g., the finish of a
machine's life), the worth of the resource will be zero.
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11. What is the Straight-Line Method?

Answer: B) Way to work out the loss of value of an asset over time.
Explanation:
The straight-line method is a strategy for computing devaluation and

amortization, the most common way of discounting a resource throughout a
more drawn-out timeframe than when it was bought.
12. What is the Declining Balance Method?

Answer: C) System of recording larger depreciation expenses during the earlier

years.
Explanation:
In bookkeeping, the declining balance technique is a sped-up deterioration

procedure for recording bigger devaluation costs during the prior long stretches
of a resource's helpful life while recording more modest devaluation during its
later years.
13. What is Sum of Years Digit?

Answer: D) An accelerated method for calculating an asset's depreciation.
Explanation:
Sum of the years' digits (SYD) is a sped-up technique for ascertaining a resource's
devaluation. This technique takes the resource's normal life and includes the
digits for every year; so, on the off chance that the resource was supposed to
keep going for a very long time, the number of the years' digits would be gotten
by adding: 5 + 4 + 3 + 2 + 1 to get an aggregate of 15. Every digit is then
isolated by this aggregate to decide the rate by which the resource ought to be
devalued every year, beginning with the largest number in year 1.

14. What is the Unit of Production Method?

D. Method of calculating the depreciation of the value of an asset over time.
Answer: D) Method of calculating the depreciation of the value of an asset over

time.
Explanation:
The unit of production technique is a strategy for computing the deterioration of

the worth of a resource after some time. It becomes helpful when a resource's
worth is all the more firmly connected with the number of units it delivers rather
than the number of years it is being used. This technique regularly brings about
more prominent allowances being taken for deterioration whenever the resource
is vigorously utilized, which would then be able to counterbalance periods when
the gear encounters less use.
15. Depreciation under Diminishing Balance Method is calculated on?
A. Scrap Value
B. Book Value
C. Cash Account
D. Repair
Answer: B) Book Value
Explanation:
As indicated by the Diminishing Balance Method, devaluation is charged at a

proper rate on the book worth of the resource. This strategy depends on the
understanding that in the prior years the expense of fixes to the resources is low
and henceforth more measures of deterioration ought to be charged.
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16. Depreciation on machinery will be debited in which account?
A. Cash Account
B. Balance Sheet
C. Depreciation Account
D. Machinery Account
Answer: C) Depreciation Account
Explanation:
The Depreciation charged on machinery will be debited in the Depreciation

Account.
17. What is Amortization?
A. Accounting techniques are used to periodically lower the book value of a

loan.
B. Notable reduction in the utility of an inventory item or fixed asset.
C. Accrual accounting technique used to allocate the cost of extracting
natural resources
D. The loss in the physical efficiency of an asset as it ages.
Answer: A) Accounting techniques are used to periodically lower the book value
of a loan.
Explanation:
Amortization is a bookkeeping method used to occasionally bring down the book

worth of credit or an immaterial resource throughout a set timeframe.
Concerning an advance, amortization centres around fanning out advance
instalments over the long haul. When applied to a resource, amortization is like
deterioration.
18. What is obsolescence?

loan.
natural resources
Answer: B) Notable reduction in the utility of an inventory item or fixed asset.
Explanation:
Obsolescence is an outstanding decrease in the utility of a stock thing or fixed

resource. The assurance of oldness ordinarily results in a record of the stock thing
or resource to mirror its decreased worth.
19. What is Depletion?

loan.
natural resources.
Answer: C) Accrual accounting technique used to allocate the cost of extracting

natural resources.
Explanation:
Depletion for bookkeeping and monetary announcing objects is intended to aid

in precisely recognizing the worth of the resources on the accounting report and
recording costs in the fitting period on the pay articulation.
20. What is physical deterioration?

loan.
natural resources.
Answer: D) The loss in the physical efficiency of an asset as it ages.
Explanation:
Physical deterioration is the misfortune in the actual effectiveness of a resource

as it ages. Effectiveness in this setting alludes to the resource's capacity to create
several capital administrations for a given measure of information sources. It is
equivalent to "mileage" or " rot".
Bill of Exchange MCQs

1. What is the Bill receivable account?
A) Personal Account
B) Machinery Account
C) Real Account
D) Nominal Account
Answer: A
2. A bill of exchange includes.
A) An order to pay
B) A request to pay
C) A promise to pay
D) All the above
Answer: A
3. Which bill is drawn and accepted in the same country?
A) Trade Bill
B) Foreign Bill
C) Inland Bill
D) Accommodation Bill
Answer: C
4. Who draws a bill of exchange?
A) Creditor
B) Debtor
C) Drawer
D) None of the above
Answer: C
5. What is the person known as who draws a bill of exchange
A) Drawer
B) Payee
C) Drawee
Answer: A
6. What are the three additional days known as that a drawer gives to the drawee for
payment
A) Conditional days
B) Additional days
C) Days of grace
D) Days of rebate
Answer: C
7. When the drawee signs the bill, it is considered as
A) Accepted
B) Retired
C) Renewed
D) Endorsed
Answer: A
8. What kind of acceptance is known as when the bill is accepted without any condition?
A) Qualified acceptance
B) Conditional acceptance
C) Blank acceptance
D) General acceptance
Answer: D
9. When the bill is noted from the notary public, it is known as?
A) Noting
B) Discounting
C) Accepting
Answer: A
10. What is retiring a bill under rebate means?
A) Making a payment of the bill before the due date
B) Dishonoring of a bill
C) Making a payment of the bill after the due date
D) All of the above
1. P sends out goods costing Rs.3, 00,000 to Y at cost + 25%, consignor’s

expenses Rs.5, 000. 1/10th of goods were lost in transit. Insurance claim
received Rs.3, 000. The net loss on account of abnormal loss is:
(a) Rs.27,500
(b) Rs.25,500
(c) Rs.30,500
(d) Rs.38,000
The abnormal loss is {(3,00,000+5,000) x 1/10} – 3000 = 30500 – 3000 = 27500.
Hence option (a) is correct
2. X sends out goods costing Rs.2, 00,000 to Y. 3/5th of the goods were sold
by consignee for Rs.1, 40,000. Commission is 2% on sales + 20% of goods
sold exceeding cost price. The amount of commission will be:
(a) Rs.5,667
(b) Rs.6,800
(c) Rs.6,000
(d) Rs.5,600
Value of 3/5 th goods sold = 3/5 x2,00,000 = 1,20,000. Extra price received
(profit) = 1,40,000 – 120000=20000. Commisssion = 2% of 1,40,000 + 20% of
(20,000) = 2800+ 4000= 6800
Hence option (b) is correct
3. A proforma invoice is sent by:
(a) Consignee to consignor
(b) Consignor to consignee
(c) Debtors to consignee
(d) Debtors to consignor
A pro-forma invoice is sent by consignor to consignee giving description and
value of goods sent.
Hence option (b) is correct.
4. P sold goods to Q on consignment. Q sold the goods to R. R sold the
goods to S. Who is the debtor in the books of P :
(a) Q
(b) R
(c) S
(d) all of Q, R & S.
Here Q is consignee. Actual customer of P is R whom the goods were sold by his
consignee Q. S is customer of R, not of P. So, R is the debtor in the books of P.
So, answer is (b).
5. Commission provided by the consignor to the consignee to cover bad
debt is known as
(a) Ordinary commission
(b) Del credere Commission
(c) Over-riding commission
(d) Special commission.
Del-credere commission is the commission which is provided by the consignor to
the consignee to promote credit sales and which is allowed to cover loss of due
to bad debts only. Hence option (b) is correct.
6. Over-riding commission is calculated on:
(a) Cash sales
(b) Credit sales only
(c) Sales at higher price
(d) Credit sales less cash sales.
Over-riding commission is an additional commission payable to consignee by
consignor on total sales amount for making sales at above specific price or at
above invoice price.
Hence option (c) is correct.
7. If the del credere commission is 10%, cash sales is Rs.5,000 and credit
sales is Rs.10, 000. Calculate the amount of del credere commission.
(a) Rs.1,500
(b) Rs.1,000
(c) Rs.500
(d) None of the above.
Del-credere commission is calculated on total sales i.e. cash and credit sales
(unless there is any agreement to pay on Credit sales only). So, the amount of
del-credere commission = Rs.(10,000 +5,000) x 1/10 = Rs.1,500. Hence option
(a) is correct
8. Del credere commission is allowed to cover-
(a) Normal loss
(b) Abnormal loss
(c) Loss due to bad debts
(d) All of the above
Del-credere commission will save consignor from loss of bad debts . So, option
(c) is correct.
9. X sent goods costing Rs 2,00,000 to his consignee Y, to be sold at 20%
above cost. Y sold goods of Invoice value of Rs.1,20,000 on credit, and
30,000 in cash. Goods costing 12000 were destroyed in Fire. Y is entitled to
Commission of 10% + 2% Del credere commission on sale. What would be
commission payable to Y
(a) 18000 √
(b) 3600
(c) 24000
(d) 12000
Y will get commission of 10+2=12% on (1,20,000+30,000), i.e on 12% on
1,50,000 = 18,000. So, option (a) is correct.
10. The unsold stock on consignment is valued at-
(a) Original cost of the goods
(b) Original cost + expenses incurred by both consignor and consignee
(c) Original cost + expenses incurred only by the consignee
(d) Original cost + all expenses incurred by consignor & consignee
The unsold stock on consignment is valued at Original cost + expenses incurred
by both consignor and consignee. So, option (b) is correct.
11. Consignment Stock is valued
(a) Cost price
(b) Market price
(c) Selling price
(d) Cost or net realizable value, whichever is less.
Like Closing stock, the Stock with consignee is valued at cost or net realizable
value whichever is less. So, option (d) is correct.
12. X sends out goods costing Rs.3, 00,000 to Y at cost + 20%. Consignor’s
expenses Rs.6, 000. 10% of the goods were lost in transit. 2% of the goods
evaporated (normal loss). Insurance claim received Rs.2, 000. The net loss
on account of abnormal loss is:
(a) Rs.28,600
(b) Rs.26,600
(c) Rs.31,600
(d) Rs.27,000
Net abnormal loss = [{(3,00,000 + 6,000)} x 10 /100] – 2,000 = Rs.(3,06,000 x
10 /100) – 2,000 = Rs.30,600 – 2,000 = Rs.28,600. So, option (a) is correct.
(evaporation is normal loss, hence not counted)
13. Goods sent to consignment at cost + 33.33%. The percentage of
loading on invoice price will be:
(a) 25%
(b) 33.33%
(c) 20%
Goods sent on consignment = Cost + 33.33 % i.e. (100 + 33.33) % = 133.33 %.
Invoice price 133.33 when cost price 100. Invoice price is 100, when cost price =
100 x 100/ 133.33 = 75 % (Cost price). So, the % of loading =(100 – 75)% =
25%. So, option (a) is correct.
14. Goods sent out on consignment Rs.7, 60,000. Opening consignment
stock Rs.48, 000. Cash sales Rs.7, 50,000. Consignor’s expenses Rs.30,
000. Consignee’s expenses Rs.22, 000. Commission Rs.20,000. Closing
consignment stock Rs.2, 70,000. The profit on consignment is:
(a) Rs.1,50,000
(b) Rs.1,40,000
(c) Rs.92,000
Profit on consignment = (Sales + Closing stock) – (Goods sent out + Opening
stock + Consignor’s expenses + Consignee’s expenses + Commission)
= Rs.(7,50,000 + 2,70,000) – Rs.(7,60,000 + 48,000 + 30,000 + 22,000 + 20,000)
= Rs.(10,20,000 – 8,80,000) = Rs.1,40,000. So, option (b) is correct.
15. X sends out 50 boxes to Y of Delhi costing Rs.200 / box. Consignor’s
expenses
Rs.2, 000. Consignee’s expenses on selling Rs.1, 500. 3/5 th of the goods
sold by consignee, ½ of the balance goods were lost in consignee’s
godown due to fire. The value of abnormal loss will be:
(a) Rs.2,700
(b) Rs.2,400
(c) Rs.4,200
Total cost of goods = Rs.(50 boxes x Rs.200) + 2,000 = Rs.12,000
Cost of goods sold = Rs.12, 000 x (3 /5) = Rs.7, 200.
So, the value of abnormal loss (half the goods lost) = Rs. ½ x (12,000 – 7, 200) =
Rs.2, 400.
So, option (b) is correct.
16. Goods costing Rs.2, 00,000 sent out to consignee at cost + 25%. Invoice
value of the goods will be:
(a) Rs.2,50,000
(b) Rs.2,40,000
(c) Rs.3,00,000
Invoice value of the goods = 2,00,000 + 25% of 2,00,000 = 2,00,000 +
50,000=.2, 50,000.
So, option (a) is correct.
17. Goods of the invoice value Rs.2, 50,000 sent out to consignee at 20%
profit on cost. The loading amount will be:
(a) Rs.40,000
(b) Rs.48,000
(c) Rs.50,000
The amount of loading Amount = Rs.2, 50,000 x 20 /100 = Rs.50, 000. So, option
(c) is correct.
18. In the books of consignor, the profit of consignment will be transferred
to:
(a) General Trading A/c
(b) General P/L A/c
(c) Drawings A/c
In the books of consignor, the profit of consignment will be transferred to General
P/L A/c. So, option (b) is correct.
19. Relation between Consignor and consignee is as a
(a) Master and servant
(b) Debtors and creditor
(c) Principal and agent
(d) Seller and buyer.
Relationship between consignor and consignee is that of principal and agent. So,
option (c) is correct.
20. Balance of consignment account shows
(a) Stock lying with consignee
(b) Profit and loss on consignment
(c) Amount due from consignee
(d) Amount due to consignee.
The balance of consignment account shows profit and loss on consignment. So,
option (b) is correct.
21. Consignment stock A/c is a
(a) Representative personal A/c
(b) Real A/c
(c) Nominal A/c
(d) Personal A/c.
Consignment stock A/c is a Representative personal A/c. So, option (b) is
correct.
22. Which of these accounts are opened in the books of consignee?
(a) Consignor A/c
(b) Goods sent on consignment A/c
(c) Consignee personal A/c
(d) Consignment A/c.
23. The balance of consignment stock is shown
(a) Assets side of balance sheet
(b) Liability side of balance sheet
(c) By way of foot note
(d) As a contingent assets.
The balance of consignment stock is called closing stock and like any other
business it is a current assets and shown assets side of Balance sheet. So,
option (a) is correct.
24. In case del credere commission is allowed to consignee, then the
Consignee bears
(a) Bad debts
(b) Consignor’s expenses
(c) Consignee’s expenses
(d) All of the above.
1. P sends out goods costing Rs.3, 00,000 to Y at cost + 25%, consignor’s
expenses Rs.5, 000. 1/10th of goods were lost in transit. Insurance claim
received Rs.3, 000. The net loss on account of abnormal loss is:
(a) Rs.27,500
(b) Rs.25,500
(c) Rs.30,500
(d) Rs.38,000
The abnormal loss is {(3,00,000+5,000) x 1/10} – 3000 = 30500 – 3000 = 27500.
Hence option (a) is correct
2. X sends out goods costing Rs.2, 00,000 to Y. 3/5th of the goods were sold
by consignee for Rs.1, 40,000. Commission is 2% on sales + 20% of goods
sold exceeding cost price. The amount of commission will be:
(a) Rs.5,667
(b) Rs.6,800
(c) Rs.6,000
(d) Rs.5,600
Value of 3/5 th goods sold = 3/5 x2,00,000 = 1,20,000. Extra price received
(profit) = 1,40,000 – 120000=20000. Commisssion = 2% of 1,40,000 + 20% of
(20,000) = 2800+ 4000= 6800
Hence option (b) is correct
3. A proforma invoice is sent by:
(a) Consignee to consignor
(b) Consignor to consignee
(c) Debtors to consignee
(d) Debtors to consignor
A pro-forma invoice is sent by consignor to consignee giving description and
value of goods sent.
Hence option (b) is correct.
4. P sold goods to Q on consignment. Q sold the goods to R. R sold the
goods to S. Who is the debtor in the books of P :
(a) Q
(b) R
(c) S
(d) all of Q, R & S.
Here Q is consignee. Actual customer of P is R whom the goods were sold by his
consignee Q. S is customer of R, not of P. So, R is the debtor in the books of P.
So, answer is (b).
5. Commission provided by the consignor to the consignee to cover bad
debt is known as
(a) Ordinary commission
(b) Del credere Commission
(c) Over-riding commission
(d) Special commission.
Del-credere commission is the commission which is provided by the consignor to
the consignee to promote credit sales and which is allowed to cover loss of due
to bad debts only. Hence option (b) is correct.
6. Over-riding commission is calculated on:
(a) Cash sales
(b) Credit sales only
(c) Sales at higher price
(d) Credit sales less cash sales.
Over-riding commission is an additional commission payable to consignee by
consignor on total sales amount for making sales at above specific price or at
above invoice price.
Hence option (c) is correct.
7. If the del credere commission is 10%, cash sales is Rs.5,000 and credit
sales is Rs.10, 000. Calculate the amount of del credere commission.
(a) Rs.1,500
(b) Rs.1,000
(c) Rs.500
Del-credere commission is calculated on total sales i.e. cash and credit sales
(unless there is any agreement to pay on Credit sales only). So, the amount of
del-credere commission = Rs.(10,000 +5,000) x 1/10 = Rs.1,500. Hence option
(a) is correct
8. Del credere commission is allowed to cover-
(a) Normal loss
(b) Abnormal loss
(c) Loss due to bad debts
(d) All of the above
Del-credere commission will save consignor from loss of bad debts . So, option
(c) is correct.
9. X sent goods costing Rs 2,00,000 to his consignee Y, to be sold at 20%
above cost. Y sold goods of Invoice value of Rs.1,20,000 on credit, and
30,000 in cash. Goods costing 12000 were destroyed in Fire. Y is entitled to
Commission of 10% + 2% Del credere commission on sale. What would be
commission payable to Y
(a) 18000 √
(b) 3600
(c) 24000
(d) 12000
Y will get commission of 10+2=12% on (1,20,000+30,000), i.e on 12% on
1,50,000 = 18,000. So, option (a) is correct.
10. The unsold stock on consignment is valued at-
(a) Original cost of the goods
(b) Original cost + expenses incurred by both consignor and consignee
(c) Original cost + expenses incurred only by the consignee
(d) Original cost + all expenses incurred by consignor & consignee
The unsold stock on consignment is valued at Original cost + expenses incurred
by both consignor and consignee. So, option (b) is correct.
11. Consignment Stock is valued
(a) Cost price
(b) Market price
(c) Selling price
(d) Cost or net realizable value, whichever is less.
Like Closing stock, the Stock with consignee is valued at cost or net realizable
value whichever is less. So, option (d) is correct.
12. X sends out goods costing Rs.3, 00,000 to Y at cost + 20%. Consignor’s
expenses Rs.6, 000. 10% of the goods were lost in transit. 2% of the goods
evaporated (normal loss). Insurance claim received Rs.2, 000. The net loss
on account of abnormal loss is:
(a) Rs.28,600
(b) Rs.26,600
(c) Rs.31,600
(d) Rs.27,000
Net abnormal loss = [{(3,00,000 + 6,000)} x 10 /100] – 2,000 = Rs.(3,06,000 x
10 /100) – 2,000 = Rs.30,600 – 2,000 = Rs.28,600. So, option (a) is correct.
(evaporation is normal loss, hence not counted)
13. Goods sent to consignment at cost + 33.33%. The percentage of
loading on invoice price will be:
(a) 25%
(b) 33.33%
(c) 20%
Goods sent on consignment = Cost + 33.33 % i.e. (100 + 33.33) % = 133.33 %.
Invoice price 133.33 when cost price 100. Invoice price is 100, when cost price =
100 x 100/ 133.33 = 75 % (Cost price). So, the % of loading =(100 – 75)% =
25%. So, option (a) is correct.
14. Goods sent out on consignment Rs.7, 60,000. Opening consignment
stock Rs.48, 000. Cash sales Rs.7, 50,000. Consignor’s expenses Rs.30,
000. Consignee’s expenses Rs.22, 000. Commission Rs.20,000. Closing
consignment stock Rs.2, 70,000. The profit on consignment is:
(a) Rs.1,50,000
(b) Rs.1,40,000
(c) Rs.92,000
Profit on consignment = (Sales + Closing stock) – (Goods sent out + Opening
stock + Consignor’s expenses + Consignee’s expenses + Commission)
= Rs.(7,50,000 + 2,70,000) – Rs.(7,60,000 + 48,000 + 30,000 + 22,000 + 20,000)
= Rs.(10,20,000 – 8,80,000) = Rs.1,40,000. So, option (b) is correct.
15. X sends out 50 boxes to Y of Delhi costing Rs.200 / box. Consignor’s
expenses
Rs.2, 000. Consignee’s expenses on selling Rs.1, 500. 3/5 th of the goods
sold by consignee, ½ of the balance goods were lost in consignee’s
godown due to fire. The value of abnormal loss will be:
(a) Rs.2,700
(b) Rs.2,400
(c) Rs.4,200
Total cost of goods = Rs.(50 boxes x Rs.200) + 2,000 = Rs.12,000
Cost of goods sold = Rs.12, 000 x (3 /5) = Rs.7, 200.
So, the value of abnormal loss (half the goods lost) = Rs. ½ x (12,000 – 7, 200) =
Rs.2, 400.
So, option (b) is correct.
16. Goods costing Rs.2, 00,000 sent out to consignee at cost + 25%. Invoice
value of the goods will be:
(a) Rs.2,50,000
(b) Rs.2,40,000
(c) Rs.3,00,000
Invoice value of the goods = 2,00,000 + 25% of 2,00,000 = 2,00,000 +
50,000=.2, 50,000.
So, option (a) is correct.
17. Goods of the invoice value Rs.2, 50,000 sent out to consignee at 20%
profit on cost. The loading amount will be:
(a) Rs.40,000
(b) Rs.48,000
(c) Rs.50,000
The amount of loading Amount = Rs.2, 50,000 x 20 /100 = Rs.50, 000. So, option
(c) is correct.
18. In the books of consignor, the profit of consignment will be transferred
to:
(a) General Trading A/c
(b) General P/L A/c
(c) Drawings A/c
In the books of consignor, the profit of consignment will be transferred to General
P/L A/c. So, option (b) is correct.
19. Relation between Consignor and consignee is as a
(a) Master and servant
(b) Debtors and creditor
(d) Seller and buyer.
Relationship between consignor and consignee is that of principal and agent. So,
option (c) is correct.
20. Balance of consignment account shows
(a) Stock lying with consignee
(b) Profit and loss on consignment
(c) Amount due from consignee
(d) Amount due to consignee.
The balance of consignment account shows profit and loss on consignment. So,
option (b) is correct.
21. Consignment stock A/c is a
(a) Representative personal A/c
(b) Real A/c
(c) Nominal A/c
(d) Personal A/c.
Consignment stock A/c is a Representative personal A/c. So, option (b) is
correct.
22. Which of these accounts are opened in the books of consignee?
(a) Consignor A/c
(b) Goods sent on consignment A/c
(c) Consignee personal A/c
(d) Consignment A/c.
23. The balance of consignment stock is shown
(a) Assets side of balance sheet
(b) Liability side of balance sheet
(c) By way of foot note
(d) As a contingent assets.
The balance of consignment stock is called closing stock and like any other
business it is a current assets and shown assets side of Balance sheet. So,
option (a) is correct.
24. In case del credere commission is allowed to consignee, then the
Consignee bears
(a) Bad debts
(b) Consignor’s expenses
(c) Consignee’s expenses
(d) All of the above.
1. M and N enter into a joint venture where M supplies goods worth Rs.6000
and spends Rs.300 on expenses. N sells the entire lot for Rs.7,800 meeting
selling expenses amounting to Rs.300. Profit sharing ratio equal. N remits
to M the amount due. The amount of remittance will be:
(a) Rs.6,900
(b) Rs.7,500
(c) Rs.6,300
(d) Rs.6,600
Total Profit = 7800 – (6000 + 300 +300) = 7800- 6600 = 1200. So, M & N will
share profit of Rs 600 each. So, N will remit Rs 7800 – 300 (exp incurred by him)
– 600 (his share of profit) = 6900
So, option (a) is correct
2. When unsold stock is taken away by a co-venturer, then account is
debited:
(a) Joint Stock
(b) Joint Venture
(c) Joint e Bank Account
(d) Co – venturers capital account
When unsold stock is taken away by a co-venturer, then Co – venturer’s capital
account is debited. So, option (d) is correct
3. A bought goods costing 2,00,000. B sold 4/5th of goods for Rs.2,50,000.
Balance goods were taken over by B at cost less 20%. Find out profit on
venture:
(a) Rs.82,000
(b) Rs.90,000
(c) Rs.50,000
(d) None
Cost of goods sold = 2,00,000 x 4/5 = 1,60,000. So, profit on goods sold =
2,50,000 – 1,60,000 = 90000. Loss on goods taken by B= (2,00,000 – 1,60,000)
x 20% = 8000. Hence net profit = 90000 – 8000 = 82000. Hence option (a) is
correct.
4. Joint venture account is a
(a) Personal account
(b) Real account
(c) Nominal account
(d) None
Joint venture account contains all entries of Income and Expenses related to the
Joint Venture. So it is a Nominal Account. Hence option (c) is correct.
5. A in joint venture with B, purchased goods costing Rs.2,00,000. B sold
most of the goods for Rs.2,80,000. Unsold material costing Rs.10,000 was
taken over by A at Rs.8,000. A is entitled to get 1% commission on
purchases. B is entitled to get 2 % commission on sales, Profit on venture
will be :
(a) Rs.80,000
(b) Rs.80,800
(c) Rs.81,200
(d) Rs.80,400
Cost of goods sold = 200000-10000=190000. Sale value of goods sold –
2,80,000. So Gross Profit=280000-19000=90,000. Expenses: Commission on
Purchase: 1% of 200000=2000. Commission on Sale 2% of 280000=5600. Loss
on materials taken over 10000-8000 =2000. So, net profit = 90000 –
(2000+5600+2000) = 90000-9600=80400. Hence option (d) is correct.
6. The parties to joint venture are called
(a) Co-venturers
(b) Partners
(d) Friends
The parties to joint venture are called Co-venturers. Hence option (a) is correct.
7. When co-ventures initially contribute for a joint venture which account
should be debited in case when separate set of books are maintained:
(a) Purchases A/c
(b) Joint ventures A/c
(c) Venture’s Capital A/c
(d) Joint Bank A/c
When separate set of books are maintained for Joint Venture, Joint Bank
Account is debited when co-ventures initially contribute for a joint venture.
8. A and B enter into a joint venture to underwrite the shares of K Ltd. K
Ltd. make an issue of 1,00,000 equity shares of Rs.10 each. 80% of issues
are subscribed by the party. The profit sharing ratio between A and B is 3 :
2. The balance unsubscribed shares are purchased by A and B in profit
sharing ratio. How many shares are purchased by A ?
(a) 80,000 shares
(b) 72,000 shares
(c) 12,000 shares
(d) 8,000 shares
80 % subscribed. So, 20% of 100000 shares = 20000 shares remain
unsubscribed. So, A takes up 20000 x (3/5) = 12000 shares. Hence option (c) is
correct.
9. If separate set of books is maintained and discount is received at the
time of purchase of goods then such a discount will be treated as :
(a)Income of Joint Venture hence credited to joint venture account
(b)Expense of Joint Venture hence debited to joint venture account
(c) Will not be recorded in books of account
(d) Credited to co- venturers account
If separate set of books is maintained and discount is received at the time of
purchase of goods then such a discount will be treated as Income of Joint
Venture hence credited to joint venture account.
10. X and Y enter into a joint venture. X supplied goods to Y worth
Rs.70,000. X incurred expenses amounting to Rs.6,000 on joint venture.
The venture resulted in a total profit of Rs.15,000 of which their ratio of
distribution is 2 : 1. The entire sale proceeds were received by Y. Amount
received by X from Y in final settlement will be:
(a) Rs.85,000
(b) Rs.86,000
(c) Rs.80,000
(d) Rs.75,000
X will be entitled to 70000( Cost of goods supplied) + 6000 (expenses incurred)
+ 10000 (2/3rd of Profit of 15000) = 86000. Hence option (b) is correct.
10. Memorandum joint venture account is prepared:
(a) When separate set of books is maintained
(b) When each co-venturer keeps record of all the transactions himself .
(c) When each co-venturer keeps records of their own joint venture transaction
(d) None of these
Memorandum joint venture account is prepared When each co-venturer keeps
records of their own joint venture transaction. Hence option (c) is correct.
11. X maintains all records in his books. X spends Rs.10000 in Cash on
account of joint venture. Which account would be credited in the Books of
X.
(a) Memorandum Venture
(b) Joint Venture
(c) Co – Venturers
(d) Cash
In the books of X, Cash Account would be credited. Hence option (d) is correct.
12. A and B enter into a joint venture sharing profits and losses equally. A
bought 5000 Kg of rice @ Rs.25/Kg. B bought 1000 Kg of wheat @
Rs.30/Kg. A sold 1000 Kg of wheat @ Rs.35/Kg and B sold 5000 Kg of rice
@ Rs.30/ Kg.
The profit on Joint venture will be:
(a) Rs.55,000
(b) Rs.50,000
(c) Rs.60,000
(d) Rs.30,000
Profit on sale of rice = 5000 x 5=25000. Profit on sale of wheat = 1000 x 5=5000.
So Profit on Joint Venture is 25000+5000=30000. Hence option (d) is correct.
13. Karim and Rahim enter a joint venture sharing profits in 2: I. Karim
purchases goods of Rs.2,00,000 and Rahim sells goods of Rs.2,50,000.
Karim gets 1% commission on purchase and Rahim gets 5% commission
on sales. Find profit on joint venture.
(a) Rs.35,500
(b) Rs.36,000
(c) Rs.34,000
(d) Rs.38,000
Commission Expenses = 1% of 20000 = 2000 + 5% of 250000=12500 = 14500
Profit = 50000-14500=35500. So Hence option (a) is correct.
1. M and N enter into a joint venture where M supplies goods worth Rs.6000
and spends Rs.300 on expenses. N sells the entire lot for Rs.7,800 meeting
selling expenses amounting to Rs.300. Profit sharing ratio equal. N remits
to M the amount due. The amount of remittance will be:
(a) Rs.6,900
(b) Rs.7,500
(c) Rs.6,300
(d) Rs.6,600
Total Profit = 7800 – (6000 + 300 +300) = 7800- 6600 = 1200. So, M & N will
share profit of Rs 600 each. So, N will remit Rs 7800 – 300 (exp incurred by him)
– 600 (his share of profit) = 6900
So, option (a) is correct
2. When unsold stock is taken away by a co-venturer, then account is
debited:
(a) Joint Stock
(b) Joint Venture
(c) Joint e Bank Account
(d) Co – venturers capital account
When unsold stock is taken away by a co-venturer, then Co – venturer’s capital
account is debited. So, option (d) is correct
3. A bought goods costing 2,00,000. B sold 4/5th of goods for Rs.2,50,000.
Balance goods were taken over by B at cost less 20%. Find out profit on
venture:
(a) Rs.82,000
(b) Rs.90,000
(c) Rs.50,000
(d) None
Cost of goods sold = 2,00,000 x 4/5 = 1,60,000. So, profit on goods sold =
2,50,000 – 1,60,000 = 90000. Loss on goods taken by B= (2,00,000 – 1,60,000)
x 20% = 8000. Hence net profit = 90000 – 8000 = 82000. Hence option (a) is
correct.
4. Joint venture account is a
(a) Personal account
(b) Real account
(c) Nominal account
(d) None
Joint venture account contains all entries of Income and Expenses related to the
Joint Venture. So it is a Nominal Account. Hence option (c) is correct.
5. A in joint venture with B, purchased goods costing Rs.2,00,000. B sold
most of the goods for Rs.2,80,000. Unsold material costing Rs.10,000 was
taken over by A at Rs.8,000. A is entitled to get 1% commission on
purchases. B is entitled to get 2 % commission on sales, Profit on venture
will be :
(a) Rs.80,000
(b) Rs.80,800
(c) Rs.81,200
(d) Rs.80,400
Cost of goods sold = 200000-10000=190000. Sale value of goods sold –
2,80,000. So Gross Profit=280000-19000=90,000. Expenses: Commission on
Purchase: 1% of 200000=2000. Commission on Sale 2% of 280000=5600. Loss
on materials taken over 10000-8000 =2000. So, net profit = 90000 –
(2000+5600+2000) = 90000-9600=80400. Hence option (d) is correct.
6. The parties to joint venture are called
(a) Co-venturers
(b) Partners
(d) Friends
The parties to joint venture are called Co-venturers. Hence option (a) is correct.
7. When co-ventures initially contribute for a joint venture which account
should be debited in case when separate set of books are maintained:
(a) Purchases A/c
(b) Joint ventures A/c
(c) Venture’s Capital A/c
(d) Joint Bank A/c
When separate set of books are maintained for Joint Venture, Joint Bank
Account is debited when co-ventures initially contribute for a joint venture.
8. A and B enter into a joint venture to underwrite the shares of K Ltd. K
Ltd. make an issue of 1,00,000 equity shares of Rs.10 each. 80% of issues
are subscribed by the party. The profit sharing ratio between A and B is 3 :
2. The balance unsubscribed shares are purchased by A and B in profit
sharing ratio. How many shares are purchased by A ?
(a) 80,000 shares
(b) 72,000 shares
(c) 12,000 shares
(d) 8,000 shares
80 % subscribed. So, 20% of 100000 shares = 20000 shares remain
unsubscribed. So, A takes up 20000 x (3/5) = 12000 shares. Hence option (c) is
correct.
9. If separate set of books is maintained and discount is received at the
time of purchase of goods then such a discount will be treated as :
(a)Income of Joint Venture hence credited to joint venture account
(b)Expense of Joint Venture hence debited to joint venture account
(c) Will not be recorded in books of account
(d) Credited to co- venturers account
If separate set of books is maintained and discount is received at the time of
purchase of goods then such a discount will be treated as Income of Joint
Venture hence credited to joint venture account.
10. X and Y enter into a joint venture. X supplied goods to Y worth
Rs.70,000. X incurred expenses amounting to Rs.6,000 on joint venture.
The venture resulted in a total profit of Rs.15,000 of which their ratio of
distribution is 2 : 1. The entire sale proceeds were received by Y. Amount
received by X from Y in final settlement will be:
(a) Rs.85,000
(b) Rs.86,000
(c) Rs.80,000
(d) Rs.75,000
X will be entitled to 70000( Cost of goods supplied) + 6000 (expenses incurred)
+ 10000 (2/3rd of Profit of 15000) = 86000. Hence option (b) is correct.
10. Memorandum joint venture account is prepared:
(a) When separate set of books is maintained
(b) When each co-venturer keeps record of all the transactions himself .
(c) When each co-venturer keeps records of their own joint venture transaction
(d) None of these
Memorandum joint venture account is prepared When each co-venturer keeps
records of their own joint venture transaction. Hence option (c) is correct.
11. X maintains all records in his books. X spends Rs.10000 in Cash on
account of joint venture. Which account would be credited in the Books of
X.
(a) Memorandum Venture
(b) Joint Venture
(c) Co – Venturers
(d) Cash
In the books of X, Cash Account would be credited. Hence option (d) is correct.
12. A and B enter into a joint venture sharing profits and losses equally. A
bought 5000 Kg of rice @ Rs.25/Kg. B bought 1000 Kg of wheat @
Rs.30/Kg. A sold 1000 Kg of wheat @ Rs.35/Kg and B sold 5000 Kg of rice
@ Rs.30/ Kg.
The profit on Joint venture will be:
(a) Rs.55,000
(b) Rs.50,000
(c) Rs.60,000
(d) Rs.30,000
Profit on sale of rice = 5000 x 5=25000. Profit on sale of wheat = 1000 x 5=5000.
So Profit on Joint Venture is 25000+5000=30000. Hence option (d) is correct.
13. Karim and Rahim enter a joint venture sharing profits in 2: I. Karim
purchases goods of Rs.2,00,000 and Rahim sells goods of Rs.2,50,000.
Karim gets 1% commission on purchase and Rahim gets 5% commission
on sales. Find profit on joint venture.
(a) Rs.35,500
(b) Rs.36,000
(c) Rs.34,000
(d) Rs.38,000
Commission Expenses = 1% of 20000 = 2000 + 5% of 250000=12500 = 14500
Profit = 50000-14500=35500. So Hence option (a) is correct.

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List of Depreciation MCQs

A. An increase in the value of an asset over time.

Answer: B) Resource diminishes over the long run because of utilization.

Depreciation, for example, an abatement in a resource's worth, might be brought

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2. What is the principal objective of Depreciation?

A. Show last year's profit.

Answer: D) To calculate net profit

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Answer: D) Wear & Tear

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4. What is the reason behind making a provision for depreciation in

A. To show the current value of assets

Answer: C) To charge the cost of assets against profits

A depreciation arrangement can make an organization's accounting report all the

5. The Depreciation remains constant according to which method?

A. Sum of years digit

Answer: D) Straight Line Method

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6. What is Depreciable Value?

A. The combined cost of purchase and installation of an asset can be

Answer: A) The combined cost of purchase and installation of an asset can be

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7. What is Scrap Value?

A. The combined cost of purchase and installation of an asset can be

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8. Define Market Value?

A. The combined cost of purchase and installation of an asset can be

The market esteem addresses the worth of an organization as indicated by the

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9. What is Salvage Value?

A. The combined cost of purchase and installation of an asset can be

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10. What is Fixed Instalment Method?

A. The amount of depreciation each year is fixed and equal.

Answer: A) The amount of depreciation each year is fixed and equal.

Discuss this Question

11. What is the Straight-Line Method?

A. The amount of depreciation each year is fixed and equal.

The straight-line method is a strategy for computing devaluation and

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12. What is the Declining Balance Method?

A. The amount of depreciation each year is fixed and equal.

Answer: C) System of recording larger depreciation expenses during the earlier

In bookkeeping, the declining balance technique is a sped-up deterioration

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13. What is Sum of Years Digit?

A. The amount of depreciation each year is fixed and equal.

Answer: D) An accelerated method for calculating an asset's depreciation.

Discuss this Question

A. The amount of depreciation each year is fixed and equal.

Answer: D) Method of calculating the depreciation of the value of an asset over

The unit of production technique is a strategy for computing the deterioration of

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15. Depreciation under Diminishing Balance Method is calculated on?

Answer: B) Book Value

As indicated by the Diminishing Balance Method, devaluation is charged at a

16. Depreciation on machinery will be debited in which account?

Answer: C) Depreciation Account

The Depreciation charged on machinery will be debited in the Depreciation

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17. What is Amortization?