Accounting Multiple Choice Question – 20 November 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Accounting

When a machine is disposed of, the correct way to record the total depreciation charged on it up to the date of disposal is:

Select ONE answer:

  1. should be included in the trial balance as a debit balance.
  2. should be included in the trial balance as a credit balance.
  3. should sometimes be included in the trial balance as a debit balance and sometimes as a credit balance.
  4. should not be included in the trial balance at all.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

  1. Not Correct
  2. The (credit) balance on the provision for depreciation of machinery account in a firm’s nominal (general) ledger represents the total depreciation charged to date on machinery currently owned by the firm. When machinery is disposed of, the total depreciation charged on it must be removed from the account – by debiting it. The machinery disposal account is used to calculate any profit or loss arising on the disposal of machinery. This profit or loss is calculated as the difference between the proceeds of the disposal and the net book value of the item(s) being disposed. To achieve this, both the proceeds and the net book value are transferred into the disposal account and any difference is transferred to the profit and loss account. As the net book value of a fixed asset is its cost (or valuation) less than the total depreciation charged on it, both of these must be transferred into the disposal account. In the case of the total depreciation, this is achieved by answer 2.
  3. Not Correct
  4. Not Correct

 

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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