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41. A second hand car is purchased for 2,00,000 and sold at 1,40,000 after two years. If depreciation is charged @ 10% on SLM method, find the profit or loss on sale of the car?

A. 20,000 Loss
B. 20,000 Profit
C. 10,000 Loss
D. 10,000 Profit

42. A second hand car is purchased for 2,00,000 and sold at 1,40,000 after two years. If depreciation is charged @ 10% on written down value method, find the profit or loss on sale of the Second hand car?

A. Loss of 20,000
B. Loss of 22,000
C. Loss of 11,000
D. Profit of 11,000

43. Which of the following is true with respect to providing depreciation under diminishing balance method?

A. The amount of depreciation keeps increasing every year while the rate of depreciation keeps decreasing
B. The amount of depreciation and the rate of depreciation decrease every year
C. The amount of depreciation decreases while the rate of depreciation remains the same
D. The amount of depreciation and the rate of depreciation increases every year

44. Which of the following statements best describes the purpose of depreciation?

A. Regular reduction of asset value to correspond to changes in market value as the asset ages
B. A process of correlating the market value of an asset with its gradual decline in physical efficiency
C. Allocation of cost in a manner that will ensure that Plant and Equipment items are not carried on the Balance Sheet in excess of net realizable value
D. Allocation of the cost of an asset to the periods in which services are received from the asset

45. The main objective of providing depreciation is to?

A. Calculate the true profit
B. Show the true financial position in the Balance Sheet
C. Provide funds for replacement of fixed assets
D. Both A. and B. above

46. Depreciation is a process of____________?

A. Valuation
B. Valuation and allocation
C. Allocation
D. Appropriation

47. The portion of the acquisition cost of the asset yet to be allocated is known as___________?

A. Written down value
B. Accumulated value
C. Salvage value
D. Residual Value

48. Which of the following statements is true with regard to written down value method of depreciation?
i. The rate at which the asset is written off reduces year after year
ii. The amount of depreciation provided reduces from year to year
iii. The rate of depreciation as well as the amount of depreciation reduce year after year
iv. The value of the asset gets reduced to zero over a period of time

A. Only (i) above
B. Only (ii) above
C. Both (i) and (ii) above
D. (i),(ii) and (iii) above

49. The accounting process of gradually converting the unexpired cost of fixed assets into expenses over a series of accounting periods is_________?

A. Depreciation
B. Physical deterioration of the asset
C. Decrease in market value of the asset
D. Valuation of an asset at a point of time

50. Which of the following factors are primarily considered to determine the economic life of an asset?

A. Passage of time, asset usage, and obsolescence
B. Tax regulations and SEBI guidelines
C. Tax regulations and asset usage
D. SEBI guidelines and Asset usage