An example of revenue expenditure is ___________.

Purchase of land

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Payment of salaries

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Purchase of lease

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Purchase of buildings

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Solution

The correct option is C Payment of salaries
A revenue expenditure is a cost that is charged to expense as soon as the cost is incurred. A revenue expenditure is an amount that is expensed immediately thereby being matched with revenues of current accounting period. For e.g. carriage on saleable goods, salaries, wages manufacturing expense, commission, legal expenses, insurance, etc.

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Similar questions

Q. Treating a revenue expense as a capital expenditure is an example of __________.

Q. Match List-I(Items of expenditure and receipt) with List-II(Nature of expenditure and receipt) and select the correct answer using the codes given the lists.

List-I	List-II
I. Premium paid for a lease hold property	(a) Revenue expenditure
II. Insurance premium paid for risks against accidental losses of properties(fixed assets)	(b) Capital receipt
III. Amount realised from the sale of securities(investment)\ purchased earlier	(c) Deferred revenue expenditure
IV. Huge sales promotion expenses	(d) Capital expenditure

Distinguish between capital and revenue expenditure and state whether the following statements are items of capital or revenue expenditure.
(a) Expenditure incurred on repairs and whitewashing at the time of purchase of an old building in order to make it usable.
(b) Expenditure incurred to provide one more exit in a cinema hall in compliance with a government order.
(c) Registration fees paid at the time of purchase of a building.
(d) Expenditure incurred in the maintenance of a tea garden which will produce tea after four years.
(e) Depreciation charged on a plant.
(f) The expenditure incurred in erecting a platform on which a machine will be fixed.
(g) Advertising expenditure, the benefits of which will last for four years.

Funds required for purchasing current assets is an example of

(a) Fixed capital requirement

(b) Ploughing back of profits

(d) Lease financing

Q. What are the three circumstances under which an expenditure which is usually of a revenue nature may be taken as an expenditure of a capital nature?

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