Question

Interest on loan taken for the purchase of fixed assets is a ____________.

• A. Revenue expenditure
• B. Capital expenditure
• C. Deferred revenue expenditure
• D. Capital loss

Answer 1

The correct option is B Capital expenditure

Expenditure can be classified as revenue expenditure and capital expenditure.

Revenue Expenditure are those expenses which are incurred for the day to day smooth business operations.

Capital Expenditure are those which are incurred to get the benefits in coming future. Like buying of assets or heavy expenditure on overhaul of assets to improve the operational activities. Hence interest on loan taken for the purchase of fixed assets is a capital expenditure.