For each of the following statements indicate if the statement is true or false. In your answer book you need only write the number of the statement and whether it is True or False. For example, Q.1.1.11 – True Q.1.1.1 Depreciation is classified as an asset. Q.1.1.2 Depreciation is the adjustment at the beginning of the year. Q.1.1.3 Accumulated depreciation is classified as a negative asset. Q.1.1.4 Periodic method is a method used to calculate depreciation. Q.1.1.5 According to the diminishing balance method annual depreciation is calculated as a percentage of the carrying value of the asset. Q.1.1.6 The accrual concept stipulates that all expenses must be assigned to the financial period in which they are incurred. Q.1.1.7 Accrued expense is classified as a current liability. Q.1.1.8 Accrued income is classified as income. Q.1.1.9 Doubtful debts should be based on an age analysis. Q.1.1.10 The allowance/provision for credit losses is based on an estimate and decreases the potential inflow of cash from debtors
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
For each of the following statements indicate if the statement is true or false. In your answer book you need only write the number of the statement and whether it is True or False. For example, Q.1.1.11 – True
Q.1.1.1
Q.1.1.2 Depreciation is the adjustment at the beginning of the year.
Q.1.1.3
Q.1.1.4 Periodic method is a method used to calculate depreciation.
Q.1.1.5 According to the diminishing balance method annual depreciation is calculated as a percentage of the carrying value of the asset.
Q.1.1.6 The accrual concept stipulates that all expenses must be assigned to the financial period in which they are incurred.
Q.1.1.7 Accrued expense is classified as a current liability.
Q.1.1.8 Accrued income is classified as income.
Q.1.1.9 Doubtful debts should be based on an age analysis.
Q.1.1.10 The allowance/provision for credit losses is based on an estimate and decreases the potential inflow of cash from debtors
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