Account True False[1 Marks ]

Provision is made to meet an unknown liability.

In case of diminishing balance method, the asset gets reduced to zero level.

Making excessive provision for doubtful debts builds up the secret reserves in the business.

Creation of reserves is discretionary.

Written down value method is followed so that the total burden on Profit and Loss Account in respect of depreciation and repairs put together remains almost equal each year.

Dividend equalisation reserve is an example of general reserve.

Reserve created for maintaining a stable rate of dividend is treated as secret reserve.

“Provision" is a charge against profits.

Providing depreciation reduces the amount of profit available for dividend.

The main objective of providing depreciation is to calculate true profit.

Usually, capital reserves are not available for distribution as cash dividends.

Depreciation is the decline in the market value of tangible fixed assets.

Creation of reserve reduces taxable profits of the business.

There is no difference between written down value method and diminishing balance method of depreciation.

When depreciation is credited to a “Provision for Depreciation account, the fixed asset appears always at cost price in the books

Depreciation is the process of apportionment of the cost of the asset over its useful life.

Depreciation decreases only the book value of the asset, not the market value.

In diminishing balance method of depreciation, the rate per cent of depreciation gets reduced every year.

Under diminishing balance method, depreciation is charged on the original cost of the asset minus estimated scrap value.

Under diminishing balance method, depreciation is charged on the cost price of fixed asset.

Capital reserves are normally created out of free or distributable profits.

Depreciation cannot be provided in case of loss in a financial year.

Depreciation is the process of valuation of an asset.

Depreciation is provided only on fixed assets except land.

It is not necessary to provide depreciation on plant and machinery when its market value is higher than its book value.

Providing depreciation ensures sufficient cash for the replacement of an asset.

General reserve can be used only for some specific purposes.

Depreciation is a non-cash expenditure.

Provision is made to meet an unknown liability.

In case of diminishing balance method, the asset gets reduced to zero level.

Making excessive provision for doubtful debts builds up the secret reserves in the business.

Creation of reserves is discretionary.

Written down value method is followed so that the total burden on Profit and Loss Account in respect of depreciation and repairs put together remains almost equal each year.

Dividend equalisation reserve is an example of general reserve.

Reserve created for maintaining a stable rate of dividend is treated as secret reserve.

“Provision" is a charge against profits.

Providing depreciation reduces the amount of profit available for dividend.

The main objective of providing depreciation is to calculate true profit.

Usually, capital reserves are not available for distribution as cash dividends.

Depreciation is the decline in the market value of tangible fixed assets.

Creation of reserve reduces taxable profits of the business.

There is no difference between written down value method and diminishing balance method of depreciation.

When depreciation is credited to a “Provision for Depreciation account, the fixed asset appears always at cost price in the books

Depreciation is the process of apportionment of the cost of the asset over its useful life.

Depreciation decreases only the book value of the asset, not the market value.

In diminishing balance method of depreciation, the rate per cent of depreciation gets reduced every year.

Under diminishing balance method, depreciation is charged on the original cost of the asset minus estimated scrap value.

Under diminishing balance method, depreciation is charged on the cost price of fixed asset.

Capital reserves are normally created out of free or distributable profits.

Depreciation cannot be provided in case of loss in a financial year.