Reasons For Charging Depreciation - SS1 Accounting Past Questions and Answers - page 1
1
Why is depreciation charged?
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A
To recognize the gradual loss in value of a tangible asset over time
B
To increase the value of a tangible asset over time
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C
To recover the cost of a tangible asset all at once
D
To increase the taxable income of a company
2
What is the matching principle?
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A
The principle that ensures that the expenses related to an asset are recognized in the same accounting period as the revenue it generates
B
The principle that allows a company to charge depreciation on an intangible asset
C
The principle that requires a company to increase the value of a tangible asset over time
D
The principle that requires a company to recover the cost of a tangible asset all at once
3
What is the primary reason for charging depreciation?
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A
To accurately account for the loss in value of a fixed asset over time
B
To increase the taxable income of a company
C
To recover the cost of a fixed asset all at once
D
To match the expenses associated with an asset with the revenue it generates
4
How does depreciation affect a company's taxable income?
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A
It reduces the taxable income of a company
B
It increases the taxable income of a company
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C
It has no effect on the taxable income of a company
D
It increases the value of a company's assets
5
Which assets are usually subject to depreciation?
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A
Fixed assets such as buildings, vehicles, equipment, and machinery
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B
Current assets such as cash, inventory, and accounts receivable
C
Intangible assets such as patents, trademarks, and copyrights
D
Both fixed and current assets
6
What is the formula for calculating depreciation?
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7
What are some methods used to calculate depreciation?
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