Important Questions for Chapter 7 Depreciation, Provisions and Reserves

Important Questions with Answers for CBSE Class 11 Accountancy Chapter 7 Depreciation, Provisions, and Reserves which is outlined by expert Accountancy teachers from the latest version of CBSE (NCERT) books.

CBSE Class 11 Accountancy Chapter -7 Important Questions

Question 1

Define Depriciation.

Answer: Depreciation is defined as continuing or permanent decrease in the quantity, value, and quality of assets.

Question 2

What causes depreciation

Answer: Depreciation is caused by

  • By constant use
  • By the expiry of a time

Also Read: What is Depreciation?

Question 3

Give two objectives of Depreciation

Answer: The two objectives of depreciation are

  • To determine true profit.
  • To create funds for replacement of assets.

Question 4

State the two factors for determining the amount of depreciation

Answer: The two factors for determining the amount of depreciation are

  • The total cost of the asset
  • The estimated useful life of the asset

Question 5

What is the scrap value or residual of an asset?

Answer: The scrap value or residual of an asset is the estimated sale value of the assets at the end of its useful life.

Question 6

What is the formula of a depreciable cost?

Answer: Depreciable Cost= Cost of Asset – Scrap Value

Question 7

Define Provisions.

Answer: The amount retained by way of providing for any unknown liability of which the amount cannot be detained with substantial accuracy.

Question 8

State two characteristics of Provisions.

Answer: The two characteristics of Provisions are.

  • Provision is an amount set aside to meet a future expense.
  • Provisions are recorded as a current liability in the balance sheet.

Question 9

Define Reserve

Answer: Reserve refers to the amount set apart out of profit and other surpluses to meet future risks.

Question 10

If the amount of any unknown liability cannot be determined accurately

1. Provision should be created

2. Definite liability should be created

3. Reserve should be created

4. Should be shown as a contingent liability

Answer: Provision should be created

Question 11

Give one difference between reserve and provision on the basis of charge or appropriation

Answer: Reserve is an appropriation of profit and provision is a charge against profit.

Question 12

Provision is made to meet the unknown liability. Is it true or false

Answer: True

Question 13

General reserve can be used only for some specific purposes. Is it true or false

Answer: False

Question 14

Depreciation is provided only on fixed assets except for land. True or false?

Answer: True

Question 15

Depreciation is non-cash expenditure. True or false?

Answer: True

Stay tuned to BYJU’S for more CBSE Class 11 Accountancy important questions, question papers, sample papers, syllabus and Commerce notifications.

Also Check: Important Questions Chapter 8 Bills of Exchange


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  1. Nice , this is
    very useful