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CBSE Class 11 Accountancy Chapter 7 Depreciation, Provisions and Reserves Worksheet with Answers

Chapter 7 of NCERT Class 11 Accountancy introduces three fundamental accounting concepts that every commerce student must master: depreciation accounting, provisions and reserves. This printable worksheet offers structured practice across multiple question formats to help you confidently tackle board exam questions. Whether you are revising before your school tests or preparing for the annual CBSE examination, this resource provides comprehensive coverage of SLM and WDV methods, practical journal entries, and conceptual distinctions between provisions and reserves.

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Key takeaways

✓Depreciation is the permanent, continuous and gradual decrease in the book value of a fixed asset due to use, passage of time or obsolescence
✓Straight Line Method (SLM) charges equal depreciation every year while Written Down Value (WDV) method charges depreciation on reducing balance
✓Provisions are charges against profit created for known liabilities of uncertain amounts, whereas reserves are appropriations of profit
✓Depreciation reduces the value of assets in the Balance Sheet and is shown as an expense in the Profit and Loss Account
✓Revenue reserves can be distributed as dividends while capital reserves generally cannot be distributed to shareholders
✓Understanding the difference between secret reserves, general reserves and specific reserves is crucial for board exam success
✓Calculation errors in depreciation accumulate over years, making conceptual clarity essential from the foundation level

Worksheet Overview and Instructions

This worksheet is designed for CBSE Class 11 students following the latest NCERT Accountancy syllabus. Difficulty Level: Moderate to Challenging. Suggested Time: 90 minutes for completion without answers, plus 30 minutes for self-assessment using the answer key. The worksheet mirrors the actual CBSE exam pattern with a balanced mix of objective and subjective questions. Before you begin, ensure you have revised the theory portions covering causes of depreciation, factors affecting depreciation amount, methods of recording depreciation, and the accounting treatment of provisions and reserves. Keep a calculator handy for depreciation calculations. Attempt all sections in sequence to build confidence progressively from basic recall to application and analysis.

Section A contains 8 Multiple Choice Questions (1 mark each) - test your conceptual understanding
Section B has 6 Fill in the Blanks (1 mark each) - recall key terms and principles
Section C offers 5 True/False statements with corrections (1 mark each) - identify common misconceptions
Section D presents 5 Short Answer questions (3 marks each) - demonstrate application skills
Section E includes 3 Long Answer questions (5 marks each) - show comprehensive understanding
One Case Study question (4 marks) - apply concepts to real business scenarios
Complete Answer Key provided at the end with step-by-step explanations for numerical problems

Quick Chapter Recap: Depreciation, Provisions and Reserves

Before attempting the worksheet, refresh these core concepts from NCERT Class 11 Accountancy Chapter 7. Depreciation represents the systematic allocation of the depreciable amount of an asset over its useful life. The NCERT text identifies three main causes: constant use (wear and tear), efflux of time (lease expiry, patents), and obsolescence (technology changes). Two primary methods are prescribed: Straight Line Method where annual depreciation remains constant (Cost minus Scrap Value divided by Useful Life), and Written Down Value Method where depreciation is calculated on the reducing balance each year at a fixed percentage. Provisions are amounts set aside from profits for known liabilities whose exact amount is uncertain—examples include provision for doubtful debts, provision for depreciation. Reserves are appropriations of profit retained in the business to strengthen financial position—they can be revenue reserves (distributable) or capital reserves (non-distributable). The distinction between provisions (charge against profit, compulsory) and reserves (appropriation of profit, voluntary) appears frequently in CBSE examinations.

Depreciation Formula (SLM) = (Original Cost - Scrap Value) ÷ Estimated Useful Life
Depreciation Formula (WDV) = Book Value at beginning × Rate of Depreciation ÷ 100
Journal Entry for Depreciation: Depreciation A/c Dr. To Asset A/c (when asset account is reduced directly)
Alternative Entry: Depreciation A/c Dr. To Provision for Depreciation A/c (when provision account is maintained)
Provision for Doubtful Debts = Sundry Debtors × Estimated percentage of bad debts
Revenue Reserves include General Reserve, Dividend Equalisation Reserve, Investment Fluctuation Reserve

Section A: Multiple Choice Questions (8 marks)

This section tests your conceptual understanding and ability to apply definitions correctly. Each question carries one mark. Choose the most appropriate option. Negative marking does not apply, so attempt all questions even if you are unsure. These MCQs cover depreciation causes, method selection, journal entries, and the fundamental differences between provisions and reserves as outlined in NCERT Class 11 Accountancy solutions. Pay special attention to questions involving calculation-based options where you must quickly compute depreciation amounts using SLM or WDV formulas. Remember that in CBSE board exams, MCQs often test common misconceptions, so read each option carefully before marking your answer.

Section B: Fill in the Blanks (6 marks)

Complete each statement with the most appropriate term or phrase related to depreciation, provisions and reserves. This section tests your recall of key terminology from NCERT Class 11 Accountancy Chapter 7. Write your answers clearly. Each blank carries one mark. Focus on exact terms used in the NCERT textbook—for instance, use 'Written Down Value Method' rather than 'Reducing Balance Method' even though both refer to the same concept. These questions typically cover definitions, accounting treatment, and standard classifications that form the foundation of accountancy knowledge required for higher studies in commerce.

Section C: True or False with Correction (5 marks)

Read each statement carefully and write True or False. If the statement is False, rewrite it correctly in the space provided. This exercise is designed to help you identify and correct common misconceptions about depreciation accounting and reserves. Each correct identification earns 0.5 marks, and the proper correction earns another 0.5 marks, totaling 1 mark per question. Many CBSE Class 11 Accountancy students confuse provisions with reserves or mix up the characteristics of SLM and WDV—this section specifically addresses such areas of confusion. Pay attention to absolute terms like 'always', 'never', 'only' which often indicate false statements.

Section D: Short Answer Questions (15 marks)

Answer the following questions in approximately 60-80 words each. Each question carries 3 marks. These questions require you to explain concepts, differentiate between terms, and perform basic calculations related to depreciation, provisions and reserves as covered in Class 11 Accountancy notes. Structure your answers with clear definitions followed by key points or steps. For numerical questions, show all workings to earn full marks even if the final answer contains a minor error. CBSE marking schemes award step-wise marks, so a well-organized solution demonstrating correct method can secure 2 out of 3 marks even with calculation mistakes. Focus on using correct accounting terminology from NCERT—for example, always refer to 'book value' rather than 'carrying value' to match the textbook language.

Section E: Long Answer Questions (15 marks)

Answer the following questions in approximately 150-200 words each. Each question carries 5 marks. These questions test your comprehensive understanding and ability to integrate multiple concepts from NCERT Class 11 Accountancy Chapter 7. For numerical problems, present complete journal entries where asked, show detailed workings, and prepare necessary accounts. For theoretical questions, begin with a clear definition, explain the concept with suitable examples, and conclude with significance or implications. CBSE examiners specifically look for structured answers with proper headings, underlining of key terms, and logical flow. Long answer questions often combine theory with application—be prepared to explain a concept and then illustrate it with a practical example or calculation. Accuracy in journal entry format (account titles, Dr./Cr. notation, narration) is essential for scoring full marks.

Section F: Case Study Question (4 marks)

Read the following case carefully and answer the questions that follow. Case studies have become increasingly common in CBSE Class 11 Accountancy examinations as they test your ability to apply theoretical knowledge to realistic business situations. This format assesses analytical skills, decision-making ability, and comprehensive understanding of depreciation and reserves in practical contexts. Answer each sub-question separately, using information from the case. Marks are distributed across sub-questions, so ensure you attempt all parts even if you find one challenging. Your answers should reference specific details from the case scenario while applying Chapter 7 concepts correctly.

Complete Answer Key with Explanations

This comprehensive answer key provides not just correct answers but also brief explanations to help you understand the reasoning behind each solution. Use this section for self-assessment after completing the worksheet. For numerical problems, compare your workings step-by-step with the solutions provided. If your final answer differs, identify at which step the deviation occurred—this diagnostic approach is more valuable than simply checking right or wrong. For theoretical answers, the key provides model responses; your wording may differ but ensure all key points are covered. CBSETUTOR.ai offers 24×7 AI tutor support where you can upload photos of your worksheet attempts and receive instant, personalized feedback at just ₹999/month flat for all subjects across classes 6-12, with a 3-day free trial to experience doubt-solving on your schedule.

Section A answers include explanation of why the correct option is right and why others are wrong
Section B answers provide the exact term from NCERT textbook for consistency
Section C corrections are worded precisely to transform false statements into accurate ones
Section D solutions show complete workings for numerical questions and structured point-wise answers for theory
Section E solutions include properly formatted journal entries, T-accounts, and detailed explanations
Case study answers demonstrate application of multiple concepts in integrated scenarios

Section D and E Detailed Solutions (Continued)

SECTION D Q1: Straight Line Method: (i) Depreciation amount remains constant every year (ii) Calculated on original cost (iii) Asset can be reduced to scrap value or zero. Written Down Value Method: (i) Depreciation amount decreases every year (ii) Calculated on book value (reducing balance) (iii) Asset can never be reduced to zero. Q2: Depreciation is charged because (i) To show true financial position by reducing asset value for wear and tear (ii) To ascertain correct profit by charging depreciation as expense (iii) To comply with matching principle - match cost with revenue over asset's life. Q3: Provision is a charge against profit for known liability of uncertain amount (e.g., Provision for Doubtful Debts); Reserve is appropriation of profit to strengthen financial position (e.g., General Reserve). Q5: Secret reserves are reserves not disclosed in Balance Sheet, created by excessive depreciation, undervaluation of assets, or overstatement of liabilities, often to hide true profit position.

SECTION E Q2 Answer: Types of Reserves - (1) Revenue Reserves: created from revenue profits, distributable as dividends - General Reserve, Dividend Equalisation Reserve, Investment Fluctuation Reserve (2) Capital Reserves: created from capital profits, not distributable - Securities Premium, Capital Redemption Reserve, profit on revaluation (3) Specific Reserves: for specific purpose - Debenture Redemption Reserve (4) General Reserves: no specific purpose
SECTION E Q3 Answer: Required provision = 5,00,000 × 5% = ₹25,000; Existing provision = ₹15,000; Additional provision needed = ₹10,000. Journal Entry: Bad Debts A/c Dr. 10,000 / To Provision for Doubtful Debts A/c 10,000. Balance Sheet shows: Sundry Debtors 5,00,000 Less: Provision for Doubtful Debts 25,000 = Net Debtors 4,75,000

Case Study Answer Key

This section provides complete solutions to the case study question, demonstrating how to extract relevant information and apply Chapter 7 concepts systematically. Case studies require careful reading—underline key data like dates, amounts, percentages before attempting answers. Each sub-question targets a specific learning outcome: calculation skills, analytical ability, conceptual understanding, or decision-making. Model answers show the expected depth and format for each mark allotted. Understanding case-based questions is particularly important as CBSE has increased their weightage in recent years to assess application skills beyond rote learning.

How to Use This Worksheet Effectively for Exam Preparation

Maximum learning occurs when you use this worksheet strategically rather than just filling in answers. First attempt: Treat it as a timed mock test—set a 90-minute timer, work in exam conditions without referring to notes or solutions. This simulates actual exam pressure and helps identify your current level. After completion, self-assess using the answer key, marking honestly and noting which sections challenged you most. Second attempt (after 1 week): Rework only the questions you got wrong or left blank, after revising those specific topics from NCERT Class 11 Accountancy textbook and your class notes. This targeted revision is far more effective than re-reading entire chapters. Many toppers from CBSE schools across India use this error-analysis method. For students who struggle with doubt-solving at odd hours, CBSETUTOR.ai provides 24×7 AI tutor access where you can photograph any worksheet question and receive step-by-step solutions instantly—all subjects, all chapters, one flat price of ₹999/month with 3-day free trial.

Attempt the worksheet without looking at answers first to assess genuine understanding
Time yourself strictly to build speed for the actual 3-hour board exam where time management is critical
For numerical problems, always write the formula first even if solving mentally—CBSE awards method marks
After checking answers, maintain an error log noting question number, topic, and why you got it wrong
Revisit incorrect questions after 3 days, 1 week, and 1 month for spaced repetition and long-term retention
Discuss challenging questions with classmates or teacher during doubt-clearing sessions
Practice writing answers in proper format with underlined headings—presentation matters in board exams

Frequently asked questions

What is the difference between depreciation under Straight Line Method and Written Down Value Method?+

Under SLM, depreciation amount remains constant each year and is calculated on original cost minus scrap value. Under WDV, depreciation amount decreases every year as it is calculated at a fixed percentage on the reducing book value. SLM completely writes off the asset to scrap value, while WDV can never reduce the asset to zero. For CBSE exams, remember SLM spreads cost evenly while WDV front-loads depreciation expense.

How do I decide which depreciation method to use in a problem?+

The question will always specify which method to apply—either Straight Line Method or Written Down Value Method. If the problem states 'fixed percentage on original cost', use SLM. If it says 'fixed percentage on diminishing balance' or 'reducing balance', use WDV. CBSE questions explicitly mention the method, so read instructions carefully. Some problems may ask you to compare both methods for the same asset.

What is the journal entry for charging depreciation?+

Two methods exist: (1) Depreciation A/c Dr., To Asset A/c (directly reduces asset value); (2) Depreciation A/c Dr., To Provision for Depreciation A/c (maintains original cost of asset, accumulates depreciation separately). NCERT Class 11 Accountancy teaches both. The choice depends on company policy. In Balance Sheet, Method 1 shows net book value directly, Method 2 shows original cost less accumulated provision.

What is the main difference between provision and reserve?+

Provision is a charge against profit created for known liability of uncertain amount (compulsory)—examples include Provision for Doubtful Debts, Provision for Depreciation. Reserve is an appropriation of profit set aside to strengthen financial position (voluntary)—examples include General Reserve, Dividend Equalisation Reserve. This distinction is heavily tested in CBSE Class 11 exams. Remember: provisions are created before arriving at net profit, reserves are created after.

Can all reserves be distributed as dividends to shareholders?+

No. Only revenue reserves created from revenue profits can be distributed as dividends—like General Reserve, Reserve Fund. Capital reserves created from capital profits cannot be distributed—like Securities Premium Reserve, Capital Redemption Reserve, Profit on Revaluation of Assets. Some revenue reserves are also restricted by law or specific purpose, such as Debenture Redemption Reserve. CBSE questions often test this classification.

How should I prepare Machinery Account when asset is purchased mid-year?+

Calculate proportionate depreciation based on months of use. Formula: Depreciation = Amount × Rate × (Number of months held ÷ 12). For example, if machinery purchased on 1 October and books close on 31 March, depreciation = Amount × Rate × (6 ÷ 12). In Machinery Account, show purchase on debit side with date and amount, depreciation on credit side, and closing balance. This time-proportion concept appears frequently in CBSE board papers.

What are secret reserves and why would a company create them?+

Secret reserves are reserves not disclosed in the Balance Sheet, created by excessive depreciation, undervaluing assets, or overvaluing liabilities. Companies create them to hide true profit position from competitors, for taxation benefits, or to show conservative financial position. However, they violate the principle of full disclosure. In CBSE exams, you may be asked about methods of creating secret reserves and their implications for stakeholders like investors and creditors.

How much time should I spend on this worksheet during exam preparation?+

Allocate 90 minutes for first attempt under exam conditions, then 30-40 minutes for self-assessment using the answer key. Spend another hour over the next few days revising topics where you made errors. Ideally, complete this worksheet 2-3 weeks before your school exam or board exam, allowing time for revision cycles. For the 2025 CBSE board, Chapter 7 typically carries 8-12 marks, so thorough worksheet practice can directly translate to scoring those marks confidently.

Is Provision for Doubtful Debts shown on assets side or liabilities side of Balance Sheet?+

Provision for Doubtful Debts is shown on the assets side as a deduction from Sundry Debtors. The Balance Sheet presentation is: Sundry Debtors ₹X,XX,XXX, Less: Provision for Doubtful Debts ₹XX,XXX = Net Debtors ₹X,XX,XXX. It is NOT a liability. This is a common mistake in Class 11 Accountancy—provisions related to assets appear as deductions from those assets, not on the liabilities side. Master this for board exam success.

Where can I get instant doubt-solving help for depreciation calculation problems?+

CBSETUTOR.ai offers 24×7 AI tutor support where you can upload a photo of any worksheet question—whether it is depreciation calculation, journal entries, or account preparation—and receive step-by-step solutions within seconds. Unlike coaching classes with fixed timings, you get help exactly when you are studying. Covers all CBSE subjects for classes 6-12 at a flat ₹999/month with 3-day free trial, making quality academic support accessible to every student across India regardless of city or coaching availability.

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