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- Name – Quiz 35 – Fixed Assets – (Answers)
- Topic – Fixed Assets
- Answers with Explanation
Q1. Loss on sale of fixed asset is debited to _____.
Ans. Losses incurred are debited to the profit and loss account. So, when a fixed asset is sold at loss, it will be debited to the profit and loss account.
Q2. Fixed Assets are shown in _____.
Ans. Fixed assets are shown on the asset side of a balance sheet.
Q3. Insurance premium paid to insure a fixed asset is included in its value.
Ans. The given statement is False. The insurance premium paid for a fixed asset is an expense and is not to be added to the cost of an asset.
Q4. _____ is usually a fixed asset.
Ans. Equipment is mostly used for more than one accounting year and hence treated as fixed assets.
Q5. Calculate fixed assets, if machine = 40,000, furniture = 15,000 & long-term loan = 50,000.
Ans. In this numerical fixed assets = machinery + furniture = 40,000 + 15,000 = 55,000.
Q6. Vehicle bought by the owner for personal use with business money is treated as a fixed asset.
Ans. The given statement is False. Any asset bought for personal use is a drawing and not a fixed asset.
Q7. Fixed Assets cannot be liquidated easily.
Ans. The given statement is True. Fixed assets are long-term assets which cannot be converted into cash easily.
Q8. _____ account is debited when depreciation is charged on fixed assets.
Ans. Specifically, the ‘Depreciation’ account is debited while posting the journal entry for depreciation expense.
Q9. What is another name for fixed assets?
Ans. Fixed assets are also called long-term assets as they are expected to be used for a long time. At a minimum, it is expected to reap benefits for more than one accounting year (12 months).
Q10. Which of the following is not an example of fixed assets?
Ans. A prepaid expense is a current asset as it is expected to last no more than 12 months or 1 accounting cycle.
Q11. Which of the following is an example of fixed asset?
Ans. Goodwill of an entity is an intangible fixed asset whose life is more than 1 year. It is an intangible fixed asset.
Q12. When a fixed asset is purchased, it is _____ in the books of buyer.
Ans. For an increase in assets, the accounting rule is ‘debit the increase’. To journalize this ‘Fixed Asset’ account is debited.
Q13. Fixed Assets may be _____.
Ans. There are two types of fixed assets: tangible and intangible.
Q14. Fixed Assets have a life of more than _____ months.
Ans. Fixed assets are not expected to be sold within a year and are used for a long time hence they have a life of more than 12 months.
