DEPRECIATION

1). Depreciation is essentially an equitable allocation of the ------ over different periods
during which the asset is used by the firm. (Cost of a fixed asset)
2) Depreciation is calculated not only on the invoice price of the asset but also on the
------, if any. (freight and installation charges less cash discounts)
3) The total amount of depreciation to be written off over the life of an asset is equal to
the cost of the asset less its ----- (Scrap)
4). Obsolescence and inadequacy are called the ------ factors causing, depreciation.
(Economic)
5) Over or Under provision of depreciation is taken to ------- and as profit or ;loss at the
time of termination or sale of assets.(P&L)
6). The useful life of a depreciable asset for an enterprise may be ----- than its physical
life. This is usually because of such factors as obsolescence and inadequacy. (Shorter)
7). In the case of wasting assets the amount of charge determined on the basis of
exhaustion of the asset is known as ----- (Depletion)
8). When a reserve is invested in outside securities , it is known as ----- (Reserve fund )
9). Generally reserves can be utilized for declaring ------ subject to the restrictions
imposed by the Companies Act. (Dividend)
10). A secret reserve is one which is not disclosed by ----- (B.S.)
11). The normal accounting view is to ignore any appreciation in the value of assets as
otherwise it would lead to the contravening of accounting concept of ----- (Cost)
12).Depreciation is the process of ------ (Allocation of cost)
13). The excess of depreciation provided over actual depreciation of the asset is to be
treated as ------- (Profit)
14). Profit prior to incorporation is an example of ------ (Capital reserve)
15). The appropriate method of depreciation to be adopted in the case of livestock is-----
(appraisal method)
16). Accelerated methods of depreciation are used because ------- ( The assets are more
productive in earlier years of economic life)
17). If the total charge of depreciation and maintenance are considered , the method
which provides a uniform charge is ----- (Diminishing balance method)
18). Reserve is the amount set apart from ---- Profit)
19). ------ is a charge on the revenue and is made to cover losses in the value of assets or
for expenses incurred.(Provision)
20). In the B.S. reserves are shown separately under the heading ------. Provisions are
usually shown as ------ (Reserves and Surplus, deduction from the values of the assets
concerned)
21. A trader takes a lease for 5 years for Rs,.5000. He decides to write off lease by
annuity method presuming the rate of interest at 5% p.a. The annuity table shows that
annual amount necessary to write off Re.1 in 5 years at 5% p.a. Re.0.230975. The annual
depreciation and the book value in the beginning of the 2nd year will be
(1154.88,4095.12)
22). Which method of charging depreciation would you recommend for the following .
a.Freehold building, b. Long term lease c. Loose tools.
23). Straight line method of depreciation charges------- (same amount of depreciation
every year.)
24). The anuual instalment to Depreciation fund for replacement of a fixed asset if ------
(Charge against profit)
25). Depreciation is provided on ---- asset (fixed)
26).A diminishing balance method of providing for depreciation is one according to
which------ (the amount on which depreciation is provided is reduced from year to year)
27). Depreciation arises from ----- (physical wear and tear).
28). A company purchased a plant for Rs. 5000. The useful life of the plant is 10 years
and the turn in value is Rs. 500. Dtermine trhe rate of depreciation when the management
wants to depreciate it by straight line method.(9%)
Cash Flow Analysis
Fill in the Blanks:
1) Where sales are both cash and credit , cash from operation is equal to net profit from
operation minus-------- (Debtors at the end)-
2) If the net profits earned during the year are Rs.50,000 and the amount of debtors in the
beginning and at the end of the year is Rs.10,000 and Rs.20,000 respectively, then the
cash form operation will be equal to-----------(40000)
3) If the net profits made during the year Rs.50,000 and the debtors have decreased by Rs.
10,000 during the year, then the cash from operation will be equal to----------(60000)
4) The outstanding expenses in the beginning of the year paid during the year
are------------------the net profit made during the year. (deducted from)
5) Expenses paid in advance at the end of year are---------- the profit made during the year.
(deducted from)
6) An increase in accrued income during the particular year is -------- the profit and any
decrease in accrued income is---- to the profit. (deducted from)
7) Goodwill written off is -------- to the profit made during the year for calculating the cash
generated from operation. (added back)
8) For calculating cash generated from operation, provisions for doubtful debts are-------
the profit made during the year (Added back)
9) If credit sales remain uncollected, Profits (determined on accrual basis) may be---------
but the cash position will be--------- (good, bad)
10) Funds flow statements are prepared for-------period, while cash flow statements are
of-------- duration. (long period, short period)
11) If the net profits earned during the year are Rs.1 lakh and the debtors, have increased
during the year by Rs.20,000 the cash from operation is equal to -------------- (80000)
12) If profits made during the year are Rs.20,000 and increase and decrease in the current
assets are Rs.10,000 and Rs.8,000 respectively, then the cash from operation is equal
to------(18000)
13) If the profits during the year are Rs.50,000, non-cash items of profit and loss account are
Rs.10,000 and gain on sale of fixed assets is Rs.5,000 then the cash from operation will
equal to----- (55000)
14) The profits made during the year are Rs. 25,000 and there is a decrease in the value of
current assets to the extent of Rs.10, 000. However, there is a decrease in the value of
current liabilities to the extent of Rs.5,000. Hence, cash generated from operation is
equal to------ (30000)

15. The opening stock and the closing stock are Rs.5,000 and Rs.8,000 respectively;
cash purchases amount to Rs.75,000 and sales Rs.72,000, which includes credit sales
to the extent of Rs.50,000. Cash generated from operation is equal to------ (22000)
16. A negative working capital occurs when ------ liabilities are in ---- of -----
(current , excess, current assets)
17. A positive working capital will arise when current assets exceed --- (current
liabilities)
18. Credit rating refers to ---- the various debtors who seek credit.( ranking)
19. The four principal reasons for holding cash are------ ( transaction, discounts
offered, compensation and collection policy).
20. The funds required by way of permanent working capital should be provided by
--- ( Proprietors)