📘 Depreciation – 100 MCQs
1–20: Basics of Depreciation
- Depreciation refers to:
A. Increase in asset value
B. Decrease in asset value due to wear and tear
C. Cash loss
D. Profit
Answer: B - Depreciation is charged on:
A. Current assets
B. Fixed assets
C. Liabilities
D. Revenue
Answer: B - Depreciation is a:
A. Capital expenditure
B. Revenue expenditure
C. Non-cash expense
D. Income
Answer: C - Depreciation is provided to:
A. Increase profit
B. Show true profit
C. Reduce liabilities
D. Increase assets
Answer: B - Which asset is depreciated?
A. Land
B. Machinery
C. Cash
D. Stock
Answer: B - Depreciation arises due to:
A. Appreciation
B. Usage
C. Sale
D. Profit
Answer: B - Depreciation is charged for:
A. One year only
B. Entire life of asset
C. Half year only
D. No period
Answer: B - Depreciation is based on:
A. Cost principle
B. Matching principle
C. Dual aspect
D. Realisation
Answer: B - Depreciation reduces:
A. Liability
B. Asset value
C. Capital
D. Income
Answer: B - Depreciation is recorded in:
A. Balance Sheet
B. Trading A/c
C. Profit & Loss A/c
D. Cash Book
Answer: C - Depreciation is:
A. Cash payment
B. Cash receipt
C. Non-cash charge
D. Liability
Answer: C - Which asset is NOT depreciated?
A. Building
B. Plant
C. Land
D. Furniture
Answer: C - Depreciation is applicable to:
A. Wasting assets
B. Fixed assets
C. Both A & B
D. None
Answer: C - Depreciation is:
A. Optional
B. Mandatory
C. Illegal
D. Rare
Answer: B - Depreciation ensures:
A. Profit maximization
B. Correct profit measurement
C. Tax evasion
D. Capital gain
Answer: B - Depreciation is charged even if:
A. Profit occurs
B. Loss occurs
C. Asset unused
D. All of these
Answer: D - Depreciation is related to:
A. Assets
B. Liabilities
C. Income
D. Capital
Answer: A - Depreciation is calculated on:
A. Historical cost
B. Market value
C. Replacement cost
D. Scrap value
Answer: A - Depreciation is a:
A. Provision
B. Reserve
C. Fund
D. Liability
Answer: A - Depreciation is charged to:
A. Capital
B. Profit & Loss
C. Balance Sheet
D. Cash
Answer: B
21–50: Methods of Depreciation
- Straight Line Method is also called:
A. Fixed method
B. Diminishing method
C. Declining method
D. Reducing method
Answer: A - Written Down Value method is also called:
A. Fixed method
B. Reducing balance method
C. Straight method
D. Linear method
Answer: B - Under SLM, depreciation is:
A. Variable
B. Constant
C. Increasing
D. Decreasing
Answer: B - Under WDV, depreciation is:
A. Constant
B. Increasing
C. Decreasing
D. Zero
Answer: C - SLM is suitable for:
A. Machines
B. Buildings
C. Vehicles
D. All
Answer: B - WDV is suitable for:
A. Buildings
B. Machinery
C. Land
D. Cash
Answer: B - Formula of SLM:
A. Cost × Rate
B. (Cost – Scrap)/Life
C. WDV × Rate
D. None
Answer: B - WDV is calculated on:
A. Original cost
B. Reduced value
C. Scrap
D. Market
Answer: B - Depreciation under WDV reduces due to:
A. Increase in cost
B. Decrease in asset value
C. Increase in scrap
D. Sale
Answer: B - Residual value means:
A. Initial cost
B. Final value
C. Scrap value
D. Market value
Answer: C - Depreciation rate is:
A. Fixed always
B. Variable
C. Based on method
D. None
Answer: C - SLM ignores:
A. Time
B. Residual value
C. Usage
D. Profit
Answer: C - WDV method gives:
A. Equal depreciation
B. Higher initial depreciation
C. Lower initial depreciation
D. Zero
Answer: B - Depreciation under SLM remains:
A. Same every year
B. Changing
C. Increasing
D. Zero
Answer: A - WDV method is also called:
A. Reducing method
B. Fixed method
C. Straight method
D. Linear
Answer: A - In SLM, asset value becomes:
A. Zero
B. Scrap value
C. Negative
D. Doubled
Answer: B - In WDV, asset value never becomes:
A. Zero
B. Negative
C. Scrap
D. Fixed
Answer: A - Which method is simple?
A. WDV
B. SLM
C. Both
D. None
Answer: B - Which method is realistic?
A. SLM
B. WDV
C. Both
D. None
Answer: B - Depreciation rate under WDV is applied on:
A. Cost
B. Reduced value
C. Scrap
D. Profit
Answer: B
51–75: Accounting Treatment
- Depreciation account is:
A. Personal
B. Real
C. Nominal
D. Asset
Answer: C - Entry for depreciation:
A. Debit asset
B. Debit depreciation
C. Credit cash
D. None
Answer: B - Depreciation A/c is debited because:
A. Expense
B. Income
C. Asset
D. Liability
Answer: A - Asset account is credited for:
A. Increase
B. Decrease
C. Profit
D. Loss
Answer: B - Provision for depreciation is:
A. Asset
B. Liability
C. Contra asset
D. Income
Answer: C - Accumulated depreciation is:
A. Expense
B. Income
C. Total depreciation
D. Liability
Answer: C - Depreciation reduces:
A. Profit
B. Cash
C. Liability
D. Capital
Answer: A - Depreciation is shown in:
A. Balance Sheet
B. P&L
C. Both
D. None
Answer: C - Depreciation provision appears on:
A. Asset side
B. Liability side
C. P&L
D. Trading
Answer: A - Depreciation is charged annually to:
A. Match cost
B. Increase profit
C. Reduce tax only
D. None
Answer: A
76–100: Advanced & Railway Context
- Railway assets include:
A. Tracks
B. Coaches
C. Engines
D. All
Answer: D - Depreciation on railway assets ensures:
A. Replacement
B. Maintenance
C. Profit
D. Loss
Answer: A - Depreciation fund is used for:
A. Dividend
B. Replacement
C. Salary
D. Tax
Answer: B - Depreciation in Railways is important for:
A. Asset renewal
B. Profit only
C. Cash only
D. None
Answer: A - Depreciation affects:
A. Profit
B. Asset value
C. Both
D. None
Answer: C - Depreciation does NOT affect:
A. Cash
B. Profit
C. Asset
D. Expenses
Answer: A - Depreciation is calculated till:
A. Sale
B. Scrap
C. End of life
D. All
Answer: D - Depreciation policy should be:
A. Consistent
B. Changing
C. Random
D. None
Answer: A - Change in depreciation method requires:
A. Disclosure
B. Ignoring
C. Adjustment
D. Both A & C
Answer: D - Depreciation is governed by:
A. Accounting standards
B. Laws
C. Rules
D. All
Answer: D - Depreciation on obsolete asset is:
A. High
B. Low
C. Zero
D. None
Answer: A - Depreciation ensures:
A. Matching cost with revenue
B. Overstatement
C. Understatement
D. None
Answer: A - Depreciation is not provided on:
A. Land
B. Machinery
C. Furniture
D. Equipment
Answer: A - Depreciation depends on:
A. Useful life
B. Cost
C. Scrap
D. All
Answer: D - Depreciation is an example of:
A. Allocation
B. Valuation
C. Adjustment
D. None
Answer: A - Depreciation helps in:
A. True financial position
B. Profit manipulation
C. Loss increase
D. None
Answer: A - Depreciation is compulsory in:
A. Accounting
B. Tax
C. Both
D. None
Answer: C - Depreciation method once adopted:
A. Should not change
B. Can change with reason
C. Must change yearly
D. None
Answer: B - Depreciation is:
A. Internal expense
B. External expense
C. Cash expense
D. None
Answer: A - Depreciation is related to:
A. Cost allocation
B. Profit
C. Revenue
D. Liability
Answer: A - Depreciation reduces:
A. Asset book value
B. Cash
C. Liability
D. Stock
Answer: A - Depreciation is based on:
A. Estimate
B. Exact value
C. Market
D. None
Answer: A - Depreciation is recorded periodically to:
A. Match revenue
B. Increase profit
C. Reduce tax only
D. None
Answer: A - Depreciation affects:
A. Net profit
B. Asset value
C. Both
D. None
Answer: C - Depreciation is necessary for:
A. True accounts
B. Fake accounts
C. No accounts
D. None
Answer: A
April 05, 2026
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