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Depreciation, Provisions and Reserves — Revision Notes

CBSE · Class 11 · Accountancy

Depreciation, Provisions and Reserves revision notes for CBSE Class 11 Accountancy: 4 topics in quick points. Includes Meaning and Nature of Depreciation.

155 questions76 flashcards3 formulas & key relations5 concepts

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Key Topics to Revise

1

1. Meaning and Nature of Depreciation

  • Depreciation means decline in the value of a fixed asset due to use, passage of time, or obsolescence.
  • It is a permanent, continuing and gradual shrinkage in the book value of fixed assets.
  • Depreciation is an expired cost charged against revenue.
2

2. Depletion, Amortisation and Causes of Depreciation

  • Depletion is used for natural resources like mines and quarries.
  • Depreciation relates to the usage of an asset, while depletion relates to exhaustion of economic resources.
  • Amortisation is writing-off the cost of intangible assets like patents, copyright, trade marks, franchises and goodwill.
3

3. Need for Charging Depreciation and Factors Affecting It

  • Depreciation helps in matching costs with revenue.
  • It is charged like salary, carriage and postage.
  • It is required to compute true profit or loss.
4

4. Methods of Calculating Depreciation

  • Only two methods of depreciation are mandated by law and enforced by professional accounting practice in India: straight line method and written down value method.
  • Other methods include annuity method, depreciation fund method, insurance policy method, sum of years digit method and double declining method.
  • The chosen method should be applied consistently from period to period.

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Full Notes

Key Concepts

Depreciation is the decline inDepreciable assets are fixed assets expectedDepreciation depends on three main factorsWear and tearUnder this method

Frequently Asked Questions

What are the important topics in Depreciation, Provisions and Reserves for CBSE Class 11 Accountancy?
Key topics in Depreciation, Provisions and Reserves include Meaning and Nature of Depreciation, Depletion, Amortisation and Causes of Depreciation, Need for Charging Depreciation and Factors Affecting It, Methods of Calculating Depreciation. Study these first, then practise questions on each for Class 11 exams.
How should I revise Depreciation, Provisions and Reserves for Class 11 exams?
Learn the core ideas first, then work through the 155 practice questions on Depreciation, Provisions and Reserves. Revise definitions regularly and use flashcards for quick recall before the exam.

Sources & Official References

Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.

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