21.
Select the wrong statement
A.
Depreciation is the unavoidable los in the value of plant equipment and materials with lapse in time
B.
Depreciation is a cash expense
C.
Depreciation does figure in the computation of the income tax liability on cash flows from an investment
D.
Annual depreciation costs are constant when the straight-line method is used
Answer: Option B
Explanation:
22.
In the straight-line method for determining depreciation it is assumed that the value of the property
A.
decreases exponentially with time
B.
decreases logarithmically with time
C.
decreases linearly with time
D.
remains constant with time
Answer: Option C
Explanation:
23.
A property has an initial value of Rs 10000 service life of 10 years and final salvage value of Rs. 2000. What is the annual depreciation cost if straight-line depreciation is used?
A.
Rs. 1000
B.
Rs. 1200
C.
Rs. 2000
D.
Rs. 800
Answer: Option D
Explanation:
24.
When the declining-balance method is used
A.
the annual depreciation cost is a fixed percentage of the property value at the beginning of the particular year
B.
the annual cost for depreciation is same each year
C.
the value of the asset can decrease to zero at the end of the service life
D.
the value of the asset decreases linearly with tiime
Answer: Option A
Explanation:
25.
Annual depreciation costs are constant
A.
when the straight-line method is used
B.
when the sum-of-the-years-digits method is used
C.
when the declining-balance method is used
D.
none of the above
Answer: Option A
Explanation:
26.
Which of the following methods results in book values greater than those obtained with the straight-line method?
A.
Declining-balance method
B.
Sum-of-the-years-digits method
C.
Sinking-fund method
D.
Multiple straight-line method
Answer: Option C
Explanation:
27.
The ratio of the total present value to the initial investment of a given project
A.
remains constant with change in the discounted-cash-flow rate of return
B.
increases with increase in the discounted-cash flow rate of return
C.
decreases with increase in the discounted-cash-flow rate of return
D.
increases exponentially with increase in the discounted cash flow rate of return
Answer: Option C
Explanation:
28.
For most chemical plants the ration of working capital to total capital investment varies from
A.
10 to 20 per cent
B.
from 80 to 90 per cent
C.
from 51 to 65 per cent
D.
from 1 to 2 per cent
Answer: Option A
Explanation:
Read more: