Classify the following expenditures as intermediate consumption expenditure and final consumption expenditure.
(i) Expenditure on research and development by Tata.
(ii) Insurance premium paid by a firm to an insurance company.
(iii) Insurance premium paid by households to an insurance company.
(iv) Expenditure on repairs and maintenance of plant and machinery.
(v) Expenditure incurred by a firm on purchase of equipments.
(vi) Advertising expenditure incurred by Airtel on promotion of Its products.
(vii) Business expenses of the employees on tour and entertainment.

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Solution

Intermediate Consumption Expenditure: (i), (ii), (iv), (vi), (vii);
Final Consumption Expenditure: (iii), (v).

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Similar questions

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

Q. Identify the following as revenue expenditure and capital expenditure. Give reasons.
(i) Salary paid to Army officers.
(ii) Purchase of Metro coaches from Japan.
(iii) Repayment of Loan taken from World Bank.
(iv) Grants given by central government to state Government.
(v) Loan given to Union Territories.
(vi) Interest paid on National Debt
(vii) Expenditure on construction of Metro. (viii) Pension paid to retired Government employees.
(ix) 10% shares purchased by the Government in a private company.

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.

Which of the following is a final and intermediate expenditure?

(a) Purchase of furniture by an office firm

(b) Expenditure on the uniforms of the staff of the hospital

(d) Expenditure on the improvement of machinery in a factory

Calculate wages and salaries from the following data:

$G D P_{m p}$ = 4200

Depreciation = 150

NIT = - 40

Rent royalty interest = 1650

Profits = 300

Employers contribution to social security scheme = 50

Employees contribution to social security scheme = 250