Under the diminishing balance method, depreciation is calculated on: MCQ with Answer and Explanation

Question Report Error

Under the diminishing balance method, depreciation is calculated on:

A. Scrap value

B. Market value

C. Written down value

D. Original cost

Answer: Option C

Solution (By JKExamLibrary)

Diminishing balance method applies the rate to the reducing book value each year.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Practice More Accountancy and Book Keeping Questions

Question #1 Report Error

In the context of AS 28 (Impairment of Assets), if a Cash Generating Unit (CGU) is impaired, the impairment loss is allocated to reduce the carrying amount of assets in what order?

A. Equally to all tangible assets, ignoring intangible assets

B. First to other assets, then to goodwill

C. Pro-rata based on carrying amounts of all assets

D. First to goodwill, then to other assets pro-rata based on carrying amounts

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Correct Answer: Option D

Explanation:
AS 28 dictates that an impairment loss for a CGU must first reduce the carrying amount of any goodwill allocated to the CGU, and then to the other assets pro-rata based on their carrying amounts.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2 Report Error

Which of the following is not a type of error?

A. Error of interpretation

B. Error of principle

C. Error of omission

D. Error of commission

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Correct Answer: Option A

Explanation:
Common errors in accounting are error of principle, omission, commission, and compensating error. Error of interpretation is not a standard classification.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping