It is MCQ. No solution required. Answer correct option only.

1 Micro Ltd purchases a new car costing $50 000 with an estimated useful life of four years and a residual value of $10 000.

Calculate the written down value of car after 2 years.

a.

$35000

b.

$28000

c.

$30000

d.

$25000

2 Examples of reserves other than retained earnings include

a.

Retained profit

b.

None of the answers given

c.

Asset revaluation surplus

d.

Share capital

3 The journal entry required to record the tax effect of the revaluation.

a.

Deferred tax Asset (Dr), Deferred tax liability (Cr)

b.

Income tax expense (Dr), Deferred tax liability (Cr)

c.

None of answers given

d.

Deferred tax liability (Dr), Income tax expense (Cr)

4 The main movements in the retained earnings account are

a.

Transfers to and from reserves

b.

All of the answers given

c.

Changes in accounting policy and errors

d.

Dividends paid or declared

5. The journal entry required at the removal of existing accumulated depreciation prior to revaluation.

a.

Depreciation expense-Plant (Dr), Accumulated Depreciation- Plant (Cr)

b.

Loss on devaluation-Plant (Dr), Accumulate depreciation- plant (Dr), Plant (Cr)

c.

None of the answers given

d.

Plant (Dr), Accumulated Depreciation- Plant (Cr)