Expenditure incurred on purchase of fixed asset is ______.

Revenue Expenditure

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Capital Expenditure

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Deferred Revenue Expenditure

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None of these

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Solution

The correct option is C Capital Expenditure
An expenditure which results in the acquisition of permanent asset which is intended to be permanently used in the business for the purpose of earning revenue is capital expenditure.
It is the money spent by a business organization on acquiring or maintaining fixed assets such as land, building and equipment.

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Similar questions

Q. Select the most appropriate alternatives from those given below and rewrite the statements :

Expenditure incurred or purchase of fixed Asset is ______.
a) Revenue Expenditure
b) Capital Expenditure
c) Deferred revenue expenditure
d) None of these

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

Q. Which one of these is a revenue expenditure ?

Q. Match List-I with List-II and select the correct answer using the codes given the lists.

List-I	List-II
I. Heavy amount of premium on redemption of preference shares	(a) Capital expenditure
II. Excess of sale proceeds fixed assets over their original cost	(b) Deferred revenue expenditure
III. Cost of installation of an old machine	(c) Capital gain
IV. Freight paid on purchase of raw material	(d) Revenue of expenditure

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