1. What is the reduction of the value of an asset due to constant use and passage of time?

A. Depreciation
B. Depletion
C. Book Value
D. Scrap Value
Answer: A

2. What is the method of depreciation whereby the amount to recover is spread over the
estimated life of the asset in terms units of output?
A. Service Output
B. Declining Balance
C. Sinking Fund
D. Straight Line
Answer: A

3. It is the method of depreciation where a fixed sum of money is regularly deposited at

compound interest in a real or imaginary fund in order to accumulate an amount equal to
the total depreciation of an asset’s estimated life.
A. Sinking Fund Method
B. Straight Line Method
C. Declining Balance Method
D. Sum-of-Years Digit Method
Answer: A

4. What denoted the fall in the exchange rate of one currency in terms of other? The term
usually applies to floating exchange rates.
A. Currency Float
B. Currency Appreciation
C. Currency Devaluation
D. Currency Depreciation
Answer: D

5. It is an official act reducing the rate at which one currency is exchanged for another in
international currency markets.
A. Inflation
B. Depreciation
C. Devaluation
D. Deflation
Answer: C

6. It is a fund created by setting aside regular sums for investments in order to repay a debt
that will fall due at a future date.
A. Straight Line Method
 B. Sinking Fund Method
C. Declining Balance Method
D. Sum-of-Years Digit Method
Answer: B

7. It involves a sustained decline in the aggregate level of prices. It is usually associated with a
prolonged erosion of economic activity and high unemployment.
A. Inflation
B. Depreciation
C. Devaluation
D. Deflation
Answer: D

8. The depreciation of an asset using percentages of the amount of its remaining depreciated
value in each period rather than its original value.
A. Straight Line Method
B. Sinking Fund Method
C. Declining Balance Method
D. Double Declining Balance Method
Answer: C

9. It is an artificial expense that spreads the purchase price of an asset or another property
over a number of years.
A. Depreciation
B. Sinking Fund
C. Amnesty
D. Bond
Answer: A

10. In accounting, it is the process of allocating in a systematic and rational manner the cost of
a capital asset over the period of its useful life.
A. Inflation
B. Depreciation
C. Devaluation
D. Deflation
Answer: B

11. It is a method in which it assumes that the loss in value of the property is directly
proportional to the age of the property.
A. Straight Line Method
B. Sinking Fund Method
C. Declining Balance Method
D. Sum-of-Years Digit Method
 Answer: A

12. In what method of computing depreciation where it assumes that a sinking fund is
established in which funds will accumulate for replacement purposes?
A. Straight Line Method
B. Sinking Fund Method
C. Sum-of-Years Digit Method
D. Declining Balance Method
Answer: B

13. In what method of computing depreciation where it assumes that the annual cost of
depreciation is a fixed percentage of the book value at the beginning of the year?
A. Straight Line Method
B. Sinking Fund Method
C. Sum-of-Years Digit Method
D. Declining Balance Method
Answer: D

14. The declining balance method is also known as __________________.

A. Double Percentage Method
B. Constant Percentage Method
C. Modified Sinking Fund Method
D. Modified Sum-of-Years Digit Method
Answer: B

15. What type of depreciation is due to the reduction in the demand for the function that the
equipment or asset was designed to render?
A. Functional Depreciation
B. Design Depreciation
C. Physical Depreciation
D. Demand Depreciation
Answer: A

16. What type of depreciation is due to the reduction of the physical ability of an asset to
produce results?
A. Functional Depreciation
B. Design Depreciation
C. Physical Depreciation
D. Demand Depreciation
Answer: C

17. The functional depreciation is sometimes called __________________.

A. Demand Depreciation
 B. Obsolescence
C. Life Depreciation
D. Failure of Depreciation
Answer: B

18. An accelerated depreciation method is one that calculated depreciation amount greater
than what depreciation method?
A. Straight Line Method
B. Declining Balance Method
C. Sinking Fund Method
D. Sum-of-Years Digit Method
Answer: A

19. Which of the following methods of computing depreciation is usually used if the
depreciation is a function of time?
A. Capital-Recovery-Production Method
B. Period-Production Method
C. Time-of-Production Method
D. Units-of-Production Method
Answer: D

20. Which of the following is an accelerated depreciation method?

A. Straight Line and Sinking Fund Method
B. Straight Line and Double Declining Balance Method
C. Double Declining Balance and Sum-of-Years Digit Method
D. Sum-of-Years Digit and Sinking Fund Method
Answer: C