CBSE Class 11 Accountancy Important Questions Chapter 7 - Depreciation, Provisions & Reserves - Free PDF Download
The Important Questions for Depreciation, Provisions & Reserves of Chapter 7 is aimed at the CBSE Class 11 Accountancy Students. In this article, the students will get the important questions and answers to Chapter 7 of Class 11 Accountancy. Students are required to download the free PDF of the study material in order to study the important questions even when they are offline. Further, we have also discussed the important topics of this chapter and a few study tips on how to score full marks in this chapter in the upcoming exams.
FAQs on Important Questions for CBSE Class 11 Accountancy Chapter 7 - Depreciation, Provisions & Reserves
1. What is depreciation?
Any business holds and acquires fixed assets to be used in their business over a period of time, and due to the regular use of these, they start losing their value with time. This loss and the fall in the value of the fixed assets because of the regular use or expiry of time is termed as depreciation. Therefore, in simple words, depreciation is the gradual and permanent decline in the book value of the fixed asset.
2. What is the need for providing depreciation?
Here are the reasons to provide depreciation:
To Present The True Value Of The Financial System
The assets are shown to have a higher value in comparison to their actual value on the Balance sheet, and thus this balance sheet will not reflect the true insight into the financial system. To avoid this depreciation is to be charged.
Providing Funds For The Replacement Of Assets
Because depreciation is not a cash expense, the replacement of the fixed assets after its use is charged by the amount of depreciation retained in the business.
3. What are the three causes for depreciation?
The three causes for depreciation are as follows:
As a result of the constant use of the fixed assets, it loses its value after a period of time.
Expiry of Time
The assets lose their effectiveness with the passage of time even if it is not used. Natural processes such as rain, weather, etc lead to the deterioration of the assets.
Expiry of Legal Rights
When an asset is acquired for the business for a given time period, then its value drops to zero when the time period comes to end. It doesn't matter whether the asset was used or not.
4. What are the basic factors that affect the amount of depreciation?
The basic factors that affect the amount of depreciation are:
Total Cost of Asset
To get the amount of depreciation, it is important to get the total cost of the asset. The expenses that one comes across while acquiring this asset, and installing and constructing it is also included in the total cost of the asset.
Estimated Useful Life
Every asset has with it its estimated useful life, which is considered as the effective life of the fixed asset.
Estimated Scrap Value
This is the net realisable value or the sale value of the asset at the end of its effective life.
5. Are NCERT Solutions available for Class 11 Accountancy Chapter 7?
Yes, the NCERT Solutions for Class 11 Accountancy Chapter 7 are easily available and can be downloaded for free from the website of Vedantu. These solutions have exercises that are syllabus-based and will help the student to understand the concepts better. The answers that every question offers are to the point which the students can learn to retain and remember without much difficulty. With the persistent practice of these exercises, the student will be easily able to score more than 90 in any given exam. These solutions are available at free of cost on the Vedantu app and the Vedantu website.