Depreciation MCQs

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on March 26, 2023

Test your knowledge with this multiple choice question (MCQ) test on depreciation. If you can answer every question correctly, it will be excellent preparation for your exams, interviews, and professional work.

If you find any questions difficult, visit the depreciation chapter on our website to find out the necessary details about depreciation (see the Financial Accounting section).

1. The main aim of providing depreciation is:
2. Depreciation arises due to:
3. Depreciation is a process of:
4. Under the straight line method of providing depreciation, it:
5. Depreciation to machinery is debited to:
6. The total amount of depreciation of an asset cannot exceed its:
7. Depreciation is necessary to calculate:
8. Depreciation of plant is recorded in the:
9. The difference between gross investment and net investment is:
10. Currency depreciation occurs when:
11. Which of the following items provides the important function of shielding part of income from taxes?
12. The effect of inflation on the price competitiveness of a country's products may be offset by:
13. Depreciation decreases:
14. Which of the following would not lead to an increase in net cash flow?
15. In a recession:
16. Which of the following is not a cash outflow?
17. Depreciation occurs due to:
18. Under the diminishing balance method, depreciation:
19. Under the fixed installment method, depreciation is calculated on:
20. Under the diminishing balance method, depreciation is calculated on:
21. Loss on sale of plant and machinery should be written off against:
22. Assets with a limited useful life are termed:
23. The process of becoming out of date or obsolete is termed:
24. Which of these terms is used to write off in reference to tangible fixed assets?
25. The economic factor that causes depreciation is:

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About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.