In the diminishing balance method, if the rate is 10% and the asset cost is ₹10,000, what is the depreciation for the second year? MCQ with Answer and Explanation

Question

In the diminishing balance method, if the rate is 10% and the asset cost is ₹10,000, what is the depreciation for the second year?

A. ₹9,000

B. ₹1,000

C. ₹8,000

D. ₹900

Answer: Option D

Solution (By JKSSB Mock Tests)

Year 1 Dep = 10% of 10,000 = 1,000. WDV = 9,000. Year 2 Dep = 10% of 9,000 = ₹900.

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An unearned income is classified as:

A. Income

B. Liability

C. Asset

D. Expense

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Correct Answer: Option B

Explanation:
Unearned income (advance received) represents obligation to render service, hence a liability.

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Question #2

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The 'Return Inward Book' is also known as:

A. Journal

B. Cash Book

C. Sales Returns Book

D. Purchase Returns Book

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Correct Answer: Option C

Explanation:
Returns inward means goods returned by customers, i.e., sales returns.

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Question #3

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In cost accounting, fixed cost per unit:

A. Decreases with increase in production

B. Increases with increase in production

C. Remains constant

D. Fluctuates arbitrarily

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Correct Answer: Option A

Explanation:
Total fixed cost remains constant within a relevant range, so per unit fixed cost decreases as production volume increases.

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