Under the diminishing balance method, depreciation is calculated on: MCQ with Answer and Explanation

Under the diminishing balance method, depreciation is calculated on:
A. Written down value
B. Market value
C. Scrap value
D. Original cost
Answer: Option A
Solution (By JKSSB Mock Tests)
Diminishing balance method applies the rate to the reducing book value each year.

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Practice More Accountancy and Book Keeping Questions

Question #1
Which of the following is not a fundamental accounting assumption under Indian Accounting Standards?
A. Materiality
B. Accrual
C. Going Concern
D. Consistency

Correct Answer: Option A


Explanation:
Materiality is a modifying principle, not a fundamental accounting assumption. The three fundamental accounting assumptions as per AS 1 are Going Concern, Consistency, and Accrual.

Question #2
A company issues 20,000 equity shares of ₹10 each at a premium of ₹2 per share. Total amount received on application if full amount called on application will be:
A. ₹2,40,000
B. ₹1,60,000
C. ₹2,00,000
D. ₹2,20,000

Correct Answer: Option A


Explanation:
Issue price per share = ₹10 + ₹2 = ₹12. If whole amount called on application, total = 20,000 × 12 = ₹2,40,000.

Question #3
A Cash Book with Cash, Bank, and Discount columns is called a:
A. Two-column Cash Book
B. Simple Cash Book
C. Petty Cash Book
D. Three-column Cash Book

Correct Answer: Option D


Explanation:
A three-column cash book tracks cash transactions, bank transactions, and discounts allowed/received simultaneously.