Chapter 7 · Accounting Process
Depreciation, Provisions and Reserves
मूल्यह्रास, प्रावधान एवं संचय
Meaning and causes of depreciation, straight line and written down value methods, recording depreciation, sale of assets, provisions and reserves.
🎯 Unit 2: Accounting Process — 44 marks (Ch 3 to Ch 7)
Dost Sir: A new mobile loses value every year. How do businesses record this fall in value? Read the lessons from top to bottom, in this order. At the end of each lesson press “Lesson complete” so your progress is saved.
Lessons
- 1 Depreciation: Meaning, Causes and Factors Explain in your own words what depreciation is and why it is an expense · Tell depreciation apart from depletion and amortisation · List the causes of depreciation and the need to charge it · Work out the cost, net residual value and depreciable cost of an asset ⏱ 30 min ✓
- 2 Straight Line and Written Down Value Methods Calculate depreciation and its rate by the straight line method · Calculate depreciation year by year by the written down value method · Charge depreciation for part of a year when an asset is bought mid-year · Compare the two methods and choose the right one for an asset ⏱ 35 min ✓
- 3 Recording Depreciation in the Books Pass journal entries for depreciation when it is charged to the asset account · Pass journal entries when a Provision for Depreciation account is kept · Prepare the asset account, depreciation account and provision account for several years · Show the asset correctly in the balance sheet under both methods ⏱ 35 min ✓
- 4 Sale of Assets, Disposal Account and Additions Find the profit or loss when a fixed asset is sold or destroyed · Record the sale when depreciation is charged to the asset account · Use an Asset Disposal Account when a provision for depreciation is kept · Treat additions, extensions and repairs correctly and charge depreciation on a new asset bought during the year ⏱ 35 min ✓
- 5 Provisions and Reserves Explain what a provision is and create a provision for doubtful debts · Explain what a reserve is and transfer profit to a general reserve · Distinguish provision from reserve, and revenue reserve from capital reserve · Explain secret reserve, how it is created and why it is controversial ⏱ 35 min ✓
10 MCQs (instant result) + 6 board-style questions (with full solutions) Challenge Zone (Advanced / HOTS)
Challenge Zone: Depreciation, Provisions and Reserves · 4 topper-level problems + 2 brain teasers