Accounting - Study Mode

[#1361] Under which method of depreciation, the amount of depreciation expenses remains constant throughout the life of the asset?
Correct Answer

(C) Straight line method

Explanation

Solution: Under Straight line method of depreciation, the amount of depreciation expenses remains constant throughout the life of the asset.

[#1362] An increase in the value of fixed asset is referred to as:
Correct Answer

(B) Appreciation

Explanation

Solution: An increase in the value of fixed asset is referred to as Appreciation. Appreciation, in general terms, is an increase in the value of an asset over time. The increase can occur for a number of reasons, including increased demand or weakening supply, or as a result of changes in inflation or interest rates.

[#1363] The term _______ is generally used for the depreciation of natural resources
Correct Answer

(B) Depletion

Explanation

Solution: The term Depletion is generally used for the depreciation of natural resources. Depletion is an accrual accounting technique used to allocate the cost of extracting natural resources such as timber, minerals, and oil from the earth.

[#1364] Which of the following is a biological asset?
Correct Answer

(D) Living plants and animals

Explanation

Solution: Living plants and animals is a biological asset. Biological asset is any living plant or animals owned by the business, and are typically measured at fair value minus selling costs.

[#1365] Which of the following is the effect on net income if a business decreases its provision for bad debts?
Correct Answer

(A) It will increase net income

Explanation

Solution: Net income will increase is the effect on net income if a business decreases its provision for bad debts.