Group A
Identify two factors that cause depreciation
Time factor
Physical wear and tear
Why lands are not depreciated?
Because, it has indefinite life time.
Identify all 6 classes of accounts.
(Marks available for the complete answer only)
Expenses, Assets, Drawings
Liabilities, Income, Capital
What is the basic accounting equation?
Assets = Capital + Liabilities
What is meant by the term "DEAD"?
Debit
Expenses
Assets
Drawings
What is meant by the term "CLIC"?
Credit
Liabilities
Income
Capital
What is the double entry to record purchase of Motor vehicle by paying cash?
Debit - Motor vehicle
Credit - Cash
What is the formula to calculate depreciation as per "Straight Line Method"?
(Cost - Disposal value) / Useful life
What is the formula to calculate depreciation as per "Reducing Balance Method"?
Carrying value x Depreciation rate
How do you calculate the carrying value?
Cost - Accumulated Depreciation
What is the double entry to record purchase of inventory by cash?
Debit - Purchase
Credit - Cash
What is the double entry to record purchase of inventory by credit?
Debit - Purchase
Credit - Trade payable
What is the double entry to record sale of inventory by by receiving a cheque?
Debit - Bank
Credit - Sales / Revenue
What is the double entry to record sale of inventory on credit?
Debit - Trade receivables
Credit - Sales / Revenue
What is the double entry to record payment of electricity through a cheque?
Debit - Electricity
Credit - Bank
A trader purchased a motor vehicle on 1 January 2020 by paying $125,000. Expected disposal value at the end of it's useful life of 5 years, is $15,000.
Calculate the depreciation expense for the year ended 31 December 2020?
$22,000
A trader purchased a machinery on 1 January 2020 by paying $75,000. Expected disposal value at the end of it's useful life of 4 years, is $5,000.
Calculate the depreciation expense for the second year.
$17,500
A trader purchased a motor vehicle on 1 January 2020 by paying $250,000. Expected disposal value at the end of it's useful life of 5 years, is $50,000. It is the policy to depreciate vehicles at 10% per annum using reducing balance method.
Calculate the depreciation expense for the first year.
$25,000
A trader purchased a machinery on 1 January 2020 by paying $175,000. Expected disposal value at the end of it's useful life of 4 years, is $25,000. It is the policy to depreciate vehicles at 15% per annum using reducing balance method.
Calculate the depreciation expense for the second year.
$22,312.50
A trader purchased a machinery on 1 January 2020 by paying $375,000. Expected disposal value at the end of it's useful life of 5 years, is $75,000. It is the policy to depreciate vehicles at 15% per annum using reducing balance method.
Calculate the accumulated depreciation at the end of second year.
$104,062.50
A motor car with a cost of $100,000 is sold for 75,000 after two years. The company depreciates vehicles at 10% per annum using reducing balance method.
Calculate the profit or loss from disposal
Loss of $6,000
A motor car with a cost of $240,000 is sold for 110,000 after three years. The company depreciates vehicles over useful life of 5 years.
Calculate the profit or loss from disposal.
Profit of $14,000
A trader purchased a machinery on 1 January 2020 for $45,000. He depreciates machinery at 20% per annum using reducing balance method. The machinery was sold for $30,000 after two years.
Calculate the profit or loss from the disposal.
Profit of $1,200
A trader purchased a vehicle on 1 January 2020 for $80,000. He depreciates vehicles at 25% per annum using reducing balance method. The vehicle was sold for $80,000 after two years.
Calculate the profit or loss from the disposal.
Profit of $35,000
A machinery with a cost of $140,000 is sold for 80,000 after two years. The company depreciates machinery over useful life of 4 years.
Calculate the profit or loss from disposal.
Profit of $10,000