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Principles-of-accounting Chapters

12th Class Chapter 5 Principles of accounting Short Questions

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Question: 1
What is scrape value or residual value or break up value?
Answer: 1
1-20
The price at which an assets will be sold at the end of its working life,it is also known as Residual value or break up value,It is always less than market price and cost and purchase price.
Question: 2
Write the merits of straight line method of depreciation.
Answer: 2
2-20
Three merits of straight line method are given below:
1.It is simply and easy to work out.
2.The book value of an assets can be reduced to zero.
3.Useful for providing depreciation in leasehold property.
Question: 3
Define the term fluctuation.
Answer: 3
3-20
Fluctuation is decrease or increase in the market value of an assets not due to use in business.In fluctuation the price of things may decrease or increase in the market.
Example: Increase in value of land or building not due to use in business.
Question: 4
What is meant by depreciation?
Answer: 4
4-20
The gradual decrease in the value of an assets due to use in business in knows as depreciation.
Example: Machine purchase at rs 5000 and sold after 1 year rs 4000.
Question: 5
Write four methods of charging depreciation.
Answer: 5
5-20
1.Fixed installment method
2.Diminishing balance method
3.Annuity method
4.Years digit method.
Question: 6
What is Obsolescencence?
Answer: 6
6-20
Obsolescencence is the decrease in the value of an assets due to new invention,change in habit and taste of people and improvement in invention.
Example: Increase in purchase of 1 phone due to improvement of new invention.
Question: 7
What are external cause of depreciation?
Answer: 7
7-20
Depreciation which occurs for certain external cause are known as external cause of depreciation.
Example: Obsolescence and efflux of time and accident.
Question: 8
Write down the causes of depreciation of fixed assets.
Answer: 8
8-20
The main cause of depreciation are divided into two categories ,which named are below
1.internal cause depreciation.
2.External cause of depreciation.
Question: 9
What are internal cause of depreciation?
Answer: 9
9-20
Depreciation which occur for certain inherent normal cause it known as internal cause of depreciation.
Question: 10
Define depletion.
Answer: 10
10-20
The term depletion is used for decrease in the value of wasting asstes such as mines oil welts,forest etc.Or the decrease in the value propostionate to the quantum of production such as mines ,oil wells forest etc.
Question: 11
Write two objects of depreciation.
Answer: 11
11-20
It is necessary for the following reasons:
1.Ascertainment of true profit and loss
2.Ascertainment of true cost production
3.Keeping capital intact
4.True valuation of an asset.
5.Replacement of asset.

Question: 12
What is meant by wear and tear?
Answer: 12
12-20
Wear and tear is the change in shape of an assets due to in business,Or the physical change of a fixed assets is known as wear and tear.
Question: 13
How yearly depreciation is calculated under straight line method?
Answer: 13
13-20
The formula which is used to calculate he value of depreciation in straight line method is given below
Annual Depreciation = cost - scrap value/ Estimated life.
Question: 14
Write other names of reducing balance sheet.
Answer: 14
14-20
Reducing balance method is a method under which the depreciation of an assets to calculated on the book value of asset ,It is also known as diminishing balance method or book value method,In this method the price of an asset changes every year or decrease every year.
Question: 15
Define the term tangible assets.
Answer: 15
15-20
Assets which have physical existence and which can be seen,touches and can be felt are called tangible assets.
Question: 16
Define amortization.
Answer: 16
16-20
The decrease in the value of intangible assets such as patentes,copyright ,goodwill etc. is called amortization.
Question: 17
What are intangible assets?
Answer: 17
17-20
Assets which have no physical existence and which can not be seen touched but can be felt are called intangible assets.
Example:Goodwill.trade mark etc
Question: 18
Define reserve food.
Answer: 18
18-20
When the amount of reserve is invested outside the business in government paper or in gilt ,edged securities, then it is known as Reserve Fund.
Question: 19
Define fixed assets?
Answer: 19
19-20
Assets which have long life and which are brought for use for a long period of time are called fixed assets ,These are not bought for selling purpose.
Example: Land,building m,machinery ,Furniture etc.
Question: 20
What are wasting assets?
Answer: 20
20-20
Assets whose value gradually reduces on account of use and finally exhausts completely are called wasting assets.
Example : Mine ,Forest.

12th Class Principles-of-accounting Chapters Short Questions