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Question

Expenditure incurred on purchase of fixed asset is ______.

A
Revenue Expenditure
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B
Capital Expenditure
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C
Deferred Revenue Expenditure
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D
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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