Question

Heavy advertising to launch a new product is a ____________.

• A. capital expenditure
• B. revenue expenditure
• C. deferred revenue expenditure
• D. other expenditure

Answer 1

The correct option is C deferred revenue expenditure

Deferred revenue expenditure is an expenditure which is revenue in nature and incurred during an accounting period, but its benefits are to be derived from a number of following accounting periods. Heavy advertising to lunch new product is deferred revenue expenditure as it is incurred during an accounting period but benefit from this expenditure is for next accounting years.