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Accounting MCQ Questions and Solutions with Explanations | Commerce

Accounting MCQ Questions and answers with easy and logical explanations. Commerce provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. Accounting MCQ is important for exams like B.COM, M.COM, BBA, BBM, CA, CS, CMA, CPA, CFA, UPSC, NET, Banking and other commerce department exam. Page-8 section-2

Each section contains 100 MCQs on Accounting .
71
A company purchased a vehicle for Rs.6000. It will be used for 5 years and its residual value is expected to be Rs.1000. What is the annual amount of depreciation using straight line method of depreciation?
Discuss
Answer & Solution
Answer: Option A
Solution:
Cost of the asset = Rs. 6,000 Salvage Value = Rs. 1,000 Total Depreciation Cost = Cost of asset – Salvage Value = 6000 – 1000 = Rs. 5000 Useful life of the asset = 5 years Thus, annual depreciation cost = (Cost of asset – Salvage Cost)/Useful Life = 5000/5 = Rs. 1000.
72
Which of the following is the normal balance of an accumulated depreciation account?
Discuss
Answer & Solution
Answer: Option B
Solution:
Credit balance is the normal balance of an accumulated depreciation account. Accumulated depreciation has a credit balance, because it aggregates the amount of depreciation expense charged against a fixed asset.
73
How trial balance shows the accumulated depreciation?
Discuss
Answer & Solution
Answer: Option B
Solution:
Trial balance shows the accumulated depreciation as a credit item. Accumulated depreciation has a credit balance, because it aggregates the amount of depreciation expense charged against a fixed asset.
74
Which of the following is a double entry for deprecation expenses?
Discuss
Answer & Solution
Answer: Option B
Solution:
Depreciation expenses Debit and accumulated depreciation Credit is a double entry for deprecation expenses.
75
An alternative term used for accumulated depreciation expenses?
Discuss
Answer & Solution
Answer: Option A
Solution:
Provision for depreciation is an alternative term used for accumulated depreciation expenses. Depreciation expense is recognized on the income statement as a non-cash expense that reduces the company's net income.
76
Which of the following is/are kind of depreciation expenses?
Discuss
Answer & Solution
Answer: Option C
Solution:
Amortization and Depletion are kind of depreciation expenses. Depreciation, depletion, and amortization (DD&A) are accounting techniques that enable companies to gradually expense resources of economic value.
77
In depreciation calculation, the useful life of a fixed asset is:
Discuss
Answer & Solution
Answer: Option B
Solution:
In depreciation calculation, the useful life of a fixed asset is an estimate. Depreciation is “the systematic and rational allocation of the acquisition cost of an asset, less its estimated salvage value or residual value, over the assets estimated useful life.” Simply said, it's a way of allocating a portion of the cost of an asset over the period it can be used.
78
Depreciable amount + Residual value of a fixed asset = ?
Discuss
Answer & Solution
Answer: Option C
Solution:
Depreciable amount + Residual value of a fixed asset = Cost of the fixed asset. Fixed assets are depreciated only to the extent of their depreciable amount, which equals cost minus the salvage value.
79
Cost of a fixed asset - Accumulated depreciation expenses of the fixed asset = ?
Discuss
Answer & Solution
Answer: Option A
Solution:
Cost of a fixed asset - Accumulated depreciation expenses of the fixed asset = Book value of a fixed asset. Except for the cost of land, the cost of a fixed asset is spread over its estimated useful life to the business; the amount allocated to each period is called depreciation expense.
80
The purchase price of a software that will be used for more than 12 months should be regarded as
Discuss
Answer & Solution
Answer: Option B
Solution:
The purchase price of a software that will be used for more than 12 months should be regarded as a capital expenditure. It is considered a capital expenditure when the asset is newly purchased or when money is used towards extending the useful life of an existing asset.