Which of the following is true with respect to providing depreciation under diminishing balance method?
Correct answer: D. The amount of depreciation decreases while the rate of depreciation remains the same
- A. The amount of depreciation keeps increasing every year while the rate of depreciation keeps decreasing
- B. The amount of depreciation and the rate of depreciation decrease every year
- C. The amount of depreciation and the rate of depreciation increases every year
- D. The amount of depreciation decreases while the rate of depreciation remains the same
Explanation
Under the diminishing balance method, a constant percentage is applied to the asset's declining book value. Thus the depreciation amount decreases each year, while the rate remains unchanged.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
Practise Accounting Principles
351 free Accounting Principles MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Accounting Principles questions
Which of the following statements best describes the purpose of depreciation?
Depreciation is a process of____________?
The portion of the acquisition cost of the asset yet to be allocated is known as___________?
A second hand car is purchased for 2,00,000 and sold at 1,40,000 after two years. If depreciation is charged @ 10% on written down value method, find the profit or loss on sale of the Second hand car?
A second hand car is purchased for 2,00,000 and sold at 1,40,000 after two years. If depreciation is charged @ 10% on SLM method, find the profit or loss on sale of the car?
Which of the following is not a method of charging depreciation?