An expenditure is called capital expenditure when ____________.

the amount is paid in lump sum

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the amount is large

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it is intended to benefit in the current period

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it is intended to benefit in the future period

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Solution

The correct option is D it is intended to benefit in the future period
Revenue expenditure are those which are incurred for day to day business operations. Revenue expenditure does not give benefit in future.

Capital expenditure are those which are incurred for procuring an asset. Like purchase of plant, building of which the benefits are available in future period too. Such expenditure are intended to benefit in the future period.

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Similar questions

Q. Revenue expenditure is intended to benefit ___________.

Q. Deferred revenue expenditure also results in a benefit which will accrue in future period but generally for__________.

Q. The main feature of capital expenditure is that it results in a benefit which will accrue to the business enterprise for a long time, say _____________.

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.

Q. When a person who is maintaining accounts is not able to differentiate between capital expenditure and revenue expenditure, it is a/an ______________.

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