Depreciation, Provisions and Reserves

Look at your surroundings and identify at least five depreciable assets in your home, school, hospital, printing press and in a bakery.

State whether the following statements are true or false:

State with reasons whether the following statements are True or False;

Fill in the correct words:

What is 'Depreciation'?

State briefly the need for providing depreciation.

What are the causes of depreciation?

Explain basic factors affecting the amount of depreciation.

Distinguish between straight line method and written down value method of calculating depreciation.

"In case of a long term asset, repair and maintenance expenses are expected to rise in later years than in earlier year". Which method is suitable for charging depreciation if the management does not want to increase burden on profits and loss account on account of depreciation and repair.

What are the effects of depreciation on profit and loss account and balance sheet?

Distinguish between 'provision' and 'reserve'.

Distinguish between 'revenue reserve' and 'capital reserve'.

Give four examples each of 'revenue reserve' and 'capital reserves'.

Distinguish between 'general reserve' and 'specific reserve'.

Explain the concept of 'secret reserve'.

Explain the concept of depreciation. What is the need for charging depreciation and what are the causes of depreciation?

Discuss in detail the straight line method and written down value method of depreciation. Distinguish between the two and also give situations where they are useful.

Describe in detail two methods of recording depreciation. Also give the necessary journal entries.

Explain determinants of the amount of depreciation.