Question

Expenditure for which payment has been made or liability has been incurred but which is carried forward on the presumption that it will be of benefit over subsequent period(s) is termed as _________.

• A. deferred revenue expenditure
• B. prepaid expenses
• C. amortized expenses
• D. miscellaneous expenses to be charged

Answer 1

The correct option is A deferred revenue expenditure

Revenue expenditure can further be classifies as:

Revenue Expenditure and Deferred Revenue Expenditure.

Revenue expenditure are incurred to rum the business smoothly. These are normal business expenditure require for day to day operations.

Deferred revenue expenditure are those which are incurred in lum sum but the benefits of spending such amount will be available to the business in future too. Hence such amount is not debited in full to the profit & loss account of the business and a proportion of such expenses is debited every year.

Examples are, heavy advertisement cost, research and development expenses.