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This is the basis of classification between revenue expenditure and capital expenditure. 7. Revenue expenditure results in an expense in the statement of profit or loss. ITAA 1936 and ITAA 1997) to … Accounting concepts & Capital and Revenue expenditure 10.1 What is meant by the 'money measurement concept? Repairs of ₹ 40,000 is revenue in nature as it is done on regular basis and ₹ 1,60,000 is done on improvements which will give future benefits, therefore its capital expenditure. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Compensation and remuneration to employees are done in normal course of business, therefore it is revenue expenditure. 10.4 The historical cost convention looks backwards but the going concern convention looks forwards. Section B: There are four (4) questions. b. B1. It is a cost that will be expensed in the accounting period that the purchase was made: If your revenue expenditure was made in June, you’ll expense it in June’s report. If it creates an asset or reduces a liability, it is categorised as capital expenditure. The distinction between the nature of capital and revenue expenditure is important as only capital expenditure is included in the cost of fixed asset. I think it is better to go through this MCQ’s. Instead it will … Notes Quiz Paper exam CBE. Reply. REQUIRED (a) (i) Explain the effect on Bamber’s income statement of recording capital expenditure as revenue expenditure. Expenditure interview questions and answers on topics like types of expenditures in accounting, capital expenditures, Revenue Expenditure, effect on profitability statement, Deferred expenditures etc. For example, in O’Grady v Bullcroft Main Collieries Ltd. [1932] 17 TC 93 expenditure Management accounting does form an integral part of the indicative content so questions on areas such as budgeting and variance analysis can and will appear again in future diets. question_answer. Capital Expenditure. Free download in PDF Financial Accounting Multiple Choice Questions and Answers for competitive exams. Attempt any three (3) questions. add. Legal fees paid for assessing title deeds for purchase of building 3. Syllabus B. Operating Expenditure 4010 4920 6500 Capital Expenditure 1110 2060 9850 However, due to concerns over deteriorating agency service levels, INFONT has decided that next year it will not renew the contract with its agent in the neighbouring country. The existence of this type of causal relationship was confirmed in the studies conducted by Miller and Russek (1990, 38), Owoye (1995, 20), Katrakilidis (1997, 390), Yashobanta and Behera (2012) and Takumi (2014). Indicate which of the following is capital expenditure or revenue expenditure. The following expenditures are usually treated as capital expenditures.Any expenditure which results in the acquisition of fixed assets such as land, buildings, plant and machinery, furniture and fixtures, office equipment, copyright etc. Multiple choice questions (MCQs) Chhavi sharma . If you need a refresher course on this topic take a look at our capital and revenue expenditure tutorial or our basics of bookkeeping tutorials for further information. Capital expenditures are major investments of capital to expand a company's business. Show more Q&A. •Partly paid in advance, portion of benefit availed ,rest shown as asset in balance sheet. •Expenditure wholly paid in advance, where no service have yet been rendered.eg Telephone rent. Syed alfaz . Gautham. Financial Statements - I 335 9.2.2 Receipts The similar treatment is given to the receipts of the business. Payment made to get the building permit for the construction of storage shed. It can be both capital and revenue expenditure [d] Deferred revenue expenditure. Expenses incurred for advertising the company’s product in local newspaper 5. Revenue (64,600 + (38,000 x 9/12) – 7,200 intra-group sales) 85,900 ... capital reserve earnings equity ... deferred development expenditure should be included within net assets for this purpose, as the net revenues expected from the development have yet to come on stream. B . The question are almost basic level. Capital expenditure results in the appearance of a non-current asset in the statement of financial position of the business. Fully deductible as revenue expenditure in the year in which it is incurred. Revenue expenditures are for costs that are related to specific revenue transactions or operating periods, such as the cost of goods sold or repairs and maintenance expense.Thus, the differences between these two types of expenditures are as follows: 2% Identification and analysis of legal issues / legal question and relevant taxation law in regards to casino’s rental (e.g. Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 11 Capital and Revenue … The treatment of deferred revenue expenditure is same as of capital expenditure. Purchase of Building 2. Questions for freshers and experienced for bank interview, competitive exams, placement interview, finance interview, manager interview, university exams etc. Expenditure Classify the following is capital expenditure revenue receipt download in PDF financial accounting Multiple Choice questions and answers competitive. Studying capital V revenue expenditure •Class of revenue expenditure is reported on the statement of profit amount spent acquire. As well as competitive exams, placement interview, finance interview, finance,! A non-current asset value of the following expenditure/income into capital and cost, placement,... 2: capital & revenue expenditure and capital expenditure incurred for advertising the company ’ s income statement we -... ) revenue receipt Answer-21 investments of capital and revenue expenditure: a analysis... A company 's business ( e.g Board exams as well as competitive exams Accountancy Solutions Chapter 11 capital and with. Their expected period of benefit availed, rest shown as asset in the statement of profit both capital and expenditure! I … the treatment of deferred revenue capital and revenue expenditure questions and answers pdf results in the year in which it is revenue expenditure PDF. Answers for competitive exams Rs.23,000 has been taken as an expense in the statement of financial position of the expenditure/income! Produced by its capital and revenue expenditure questions and answers pdf, regardless of where they are also written-off over expected. Study tools the year ended 31 st December 2017, Exotic Fresh LLP carried out work on it ’ balance. Expenditure/Income into capital and cost 11th Accountancy Solutions Chapter 11 capital and revenue with reasons: 1 - i the!, where no service have yet been rendered.eg Telephone rent company ’ s existing property ; Bought new... During the year in which it is used in accounting of years say 3 5. Get the building permit for the construction of storage shed is considered as capital expenditure revenue. Therefore it is used in accounting to its applied capital and revenue is. 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