Any expenditure incurred in order to reduce the operating expenses is ____________.

Capital Expenditure

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Revenue Expenditure

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Deferred Revenue Expenditure

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Promotional Expenditure

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Solution

The correct option is B Capital Expenditure
Any expenditure incurred which gives the benefit to the business for a long duration is termed as capital expenditure.
If any modification is done in the plant & machinery, it reduces the normal wear and tear expenses. So if any expense is incurred which reduces the operating cost is called a capital expenditure.

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Similar questions

Q. Heavy expenditure incurred on advertisement at the time of introducing a new product is a Deferred Revenue 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.

Q. The adjustment entry to write off deferred revenue expenditure is?

Deferred Revenue Expenditure A/c To Profit & Loss A/c	Dr.
Expense A/c To Profit & Loss A/c	Dr.
Profit & Loss A/c To Provision for Expense A/c	Dr.
Profit & Loss A/c To Deferred Revenue Expenditure A/c	Dr.

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

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

List-I	List-II
I. Carriage charges a new machine purchased for factory	(a) Revenue receipt
II. Legal expenses incurred in defending a case of violation of a provision of Factories Act	(b) Revenue expenditure
III. Grant-in-aid received from the Government for the construction of a building	(c) Deferred revenue expenditure
IV. Amount received for a part of the office building sublet	(d) Capital expenditure
	(e) Capital receipt

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