1.

The method of depreciation where fixed sum of money is regularly deposited

at compound interest in a real or imaginary fund in order to accumulate an
amount equal to the total depreciation of an asset at the end of the asset’s
estimated life is known as;

 A. straight line method

 B. SYD method
 C. Declining balance method
 D. Sinking fund method
2. The main object of providing depreciation is:

 To calculate net profit

 To show the previous profit
 To satisfy the tax department
 To reduce tax
3. Depreciation arises because of:

 Wear and tear

 Decrease in the value of assets
 Increase in the value of liability
 Decrease in capital
4. Depreciation is a process of
 Allocation
 Valuation
 Both A and B
 None of these
5. Under the straight-line method of providing depreciation, it:
 Increases every year
 Decreases every year
 Remains constant every year
 None of the give options
6. Depreciation to machinery debited to:
 Profit & loss a/c
 Machinery a/c
 Depreciation a/c
 Expenses and loss a/c
7. Depreciation of plant will be written on the:
 Profit and loss a/c
 Trading a/c
 Assets a/c
 Balance sheet
8. A depreciation of a currency occurs when:

 The value of the currency falls

  The value of the currency increases
 Inflation falls
 The balance of payment improves
9.  Which of the following item provides the important function of
shielding part of income from taxes?
 Inventory
 Supplies
 Machinery
 Depreciation
10. Depreciation decreases:
 Liabilities
 Cash
 Capital
 Bank
11. Under the diminishing balance method of depreciation, it:
 Increases every year
 Decrease every year
 Remain constant every year
 None of them
12. The economic factor causing depreciation:
 Time factor
 Obsolescence and inadequacy
 Wear and tear
 Money valuation

13. A form a summary of assets, liabilities and net worth;

 A. balance method
 B. break-even point
 C. balance sheet
 D. production
14. The worth of a property, which is equal to the original cost less
depreciation, is known as;

 A. earning value
 B. scrap value
 C. book value
 D. face value
15. When using net present worth calculation to compare two projects, which
of the following could invalidated the calculations?

 A. mutually exclusive projects

 B. evaluation over different periods
 C. non-conventional cash flows
  D. difference in the magnitude of the projects
16. What must two investments with the same present worth and unequal lives
have?

 A. identical salvage value

 B. different salvage value
 C. identical equivalent uniform annual cash flows
 D. different equivalent annual cash flows
17. What is the formula for a straight-line depreciation rate?

 A. (100% – %net salvage value)/Estimated service life

 B. %net salvage value/Estimated service life
 C. 100%net salvage value/estimated service life
 D. average net salvage value/estimated service life
18. The amount received from the sale of an additional unit of a product is
termed as:

 A. marginal cost
 B. marginal utility
 C. marginal unit
 D. marginal revenue
19. An accounting book where the original record of all transaction is ordinarily
recorded.

 A. journal
 B. credit entry
 C. debit entry
 D. transaction record

18. The decrease in value of a physical property due to the passage of time;

 A. inflation
 B. depletion
 C. recession
 D. depreciation
19. We may classify an interest rate, which specifies the actual rate an interest
on the principal for one year as:

 A. Nominal rate
 B. Rate of return
 C. Exact interest rate
 D. Effective rate
20. This law states that “When the use of one of the factors of production is
limited, either in increasing cost or by absolute quantity, a point will be
reached beyond which an increase in the variable factors will result in less
than proportionate increase in output.”

 A. Law of Supply and Demand

 B. Law of Diminishing Return
 C. Law of Gravity
 D. Law of diminishing Utility
21. The difference between the present worth and the worth at some future
time is:

 A. Discount
 B. Profit
 C. Credit
 D. Debit
22. The act of charging two or more buyers or sellers different prices for the
same product where the elasticities of supply or demand at each price level
differ among market is known as:

 A. Price optimization
 B. Price discrimination
 C. Price manipulation
 D. Price war
23. A situation in which rival firms drive prices down through attempts to
undercut each other’s price is called;

 A. Price war
 B. Price discrimination price
 C. Price Leadership
 D. Oligopolistic monopoly
24. The price that the quantity per unit time that the buyers want to buy is
just equal to the quantity the sellers want to sell is called;

 A. Break-even price
 B. Equilibrium price
 C. Minimum price
 D. Maximum price
25. The length of time during which a property is capable of performing the
function for which it was designed and manufactured is termed as;

 A. economic life
 B. Life span
 C. Eternal life
 D. Physical life
26. It is a distinct legal entity, separate from individuals who own it and which
can engage in practically any business transaction which real person can do.
 A. Partnership
 B. Single proprietorship
 C. Eternal Life
 D. Physical life

27. Cash money credit necessary to establish and operate an enterprise.

 A. funds
 B. capital
 C. liabilities
 D. assets
28. The worth of property which is equal to the original cost less depreciation;

 A. scrap value
 B. earning value
 C. book value
 D. face value
29. An artificial expense that spreads the purchase price of an assets or other
property over a number of years

 A. Depreciation amnesty
 B. Sinking fund
 C. Bond
 D. None of the above
30. Estimated value at the end of the useful life;

 A. salvage value
 B. economic life
 C. balance sheet
 D. compounded annually
31. The recorded current value of an asset is known as:

 A. scrap value
 B. book value
 C. salvage value
 D. present worth
32. The ratio of the interest payment to the principal for a given unit of time
and is usually expressed as percentage of the principal is known as:

 A. investment
 B. nominal interest
 C. interest
 D. interest rate
33. A method of depreciation whereby the amount to recover is spread over the
estimated life of the asset in terms of the periods or units of output is called
  A. SOYD method
 B. Declining balance method
 C. Straight line method
 D. Sinking fund method
34. 915. Which of the following is the method of computing depreciation

 A. Straight line depreciation

 B. Sinking fund method
 C. Sum of the years method
 D. All of the above.
35. The most common method used in computing depreciation;

 A. Straight line depreciation

 B. Sinking fund method
 C. Sum of the years digit method
 D. Declining balance method
36. The depreciation charge in this method is assumed to vary directly to the
number of years and inversely to the sum of the year’s digit.

 A. Straight line depreciation

 B. Sinking fund method
 C. Sum of the year’s digit method
 D. Declining balance method
37. It is invested yearly at a rate of I to amount to (FC –SV) at the end of the life
to the property.

 A. Straight line depreciation

 B. Sinking fund method
 C. Sum of the years digit method
 D. Declining balance method
38. A written contract to pay a certain redemption value on a specified
redemption date and to pay equal dividends periodically.

 A. Bond
 B. Capital
 C. Interest
 D. Annuity
39. A method of determining when cost exactly equal to revenue.

 A. Experimental method
 B. Break-even method
 C. Break-add method
 D. None of the above
40. Find the interest on P6,800.00 for 3 years at 11% simple interest.
 A. P 1,875.00
 B. P 1,987.00
 C. P 2,144.00
 D. P 2,244.00

41. How long must a P40,000 note bearing 4% simple interest run to amount
to P41,350.00?

 A. 340days
 B. 403 days
 C. 304 days
 D. 430 days
42. If P16,000 earns P480 in 9monnths, what is the annual rate of interest?

 A. 1%
 B. 2%
 C. 3%
 D. 4%
43. The quantity of a certain commodity that is offered for sale at a certain
price at a given place and time.

 A. Demand
 B. Supply
 C. Stocks
 D. Goods
44. The cost of equipment is P500,000 and the cost of installation is P30,000.
If the salvage value is 10% of the cost of equipment at the end of years,
determine the book value at the end of the fourth year. Use straight-line
method.

 A. P146,320.50
 B. P146,000.00
 C. P146,230.50
 D. P146,023.50
45. An asset is purchased for P20,000.00. Its estimated life is 10 years after
which it will be sold for P12,000.00. Find the depreciation for the first year
using SYD method.

 A. P1,545.45
 B. P1,454.54
 C. P1,344.21
 D. P1,245.45
46. A machine has an initial cost of P50,000 and a salvage value of P10,000
after 10 years. Find the book value after 5 years using straight-line
depreciation.
  A. P31,000.00
 B. P31,500.00
 C. P30,000.00
 D. P30,500.00
47. An intangible value which is actually operating concern has due to its
operation.

 A. Book value
 B. Fair value
 C. Goodwill value
 D. Going value
48. A mathematical expression also known as the present value of an annuity
of 1 is called

 A. Load factor
 B. Demand factor
 C. Sinking fund factor
 D. Present worth factor

49. An asset is purchased for P120,000.00. Its estimated life is 10 years, after
which it will be sold for P12,000.00. Find the depreciation for the second year
using the sum-of-years’ digit method.

 A. P17,578.13
 B. P17,412.43
 C. P17,344.67
 D. P17,672.73
50. An engineer bought an equipment for P500,000. He spent an additional
amount of P30,000 for installation and other expenses. The estimated useful
life of the equipment is 10 years. The salvage value is x% of the first cost. Using
the straight line method of depreciation, the book value at the end of 5 years
will be P291,500. What is the value of x?

 A. 0.2
 B. 0.4
 C. 0.3
 D. 0.1