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Revenue Items vs Capital Items

is a non-recu...

Question

__________ is a non-recurring expense.

A

Rent of the godown.

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B

Warehouse insurance charges.

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C

Transit insurance and freight.

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D

Salesman's salary and commission.

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Solution

The correct option is C Transit insurance and freight.
Expenses which are incurred for smooth running of the business operations are called as recurring expenses. These are day to day expenses which are essential and re occurring in nature. These expenses are appears on company's financial statement under the heading "operating expenses".
Non recurring expenses are an extra ordinary expenses and non occurring in nature. These may be one time expenses or expense which are spent for an specific activity. These are shown in company's financial statement under the heading "extra ordinary expenses".

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Q. Ramesh consigned 2,000 kg of chemicals at a cost of Rs. 800 per kg to John. Ramesh paid freight and insurance charges of Rs. 20,000. of the above , 500 kg were destroyed by fire during transit . John cleared the balance of 1,500 kg of chemicals. John incurred the following expenses; Godown rent Rs. 5,000, Insurance Rs. 3,000 clearing charges Rs. 4,500. Insurance claim received against fire Rs. 4,00,000 after admitting the salvage value Rs. 10,000. For abnormal loss Consignment A / c will be credited by _____________.

Q. Ramesh consigned 2,000 MT of chemicals at a cost of Rs. 800 per MT to John. Ramesh paid freight & insurance charges of Rs. 20,000. Of the above , 500 MT were destroyed by fire during transit. John cleared the balance of 1,500 MT of chemicals and sold 1,000 MT at average price of Rs. 1,000 per Mt. John incurred the following expenses : Godown rent Rs. 5,000 Insurance Rs.3,000, clearing charges Rs. 4,500. Insurance claim received against fire Rs. 4,00,000 after admitting the salvage value Rs. 10,000. John was entitled to commission of 10% on sale proceeds. value of closing stock to be credited to Consignment A / c = ?

Q. A sends goods worth Rs.

50, 000

to B for sales for

5 %

commission. He incurs Rs.

1, 500

for freight and Rs.

500

for insurance. The goods are sold for Rs.

60, 000

, consignee incurs Rs.

500

unloading expenses and Rs.

500

rent. B sends a draft after reducing his expenses and commission. Profit or loss on consignment _______________.

Q. Tick the correct match.

$1$ . Current Asset	$1$ . Depreciation
$2$ . Nominal A/c	$2$ . Land
$3$ . Non-Depreciable Asset	$3$ . Insurance A/c
$4$ . Non-Cash Expense	$4$ . Prepaid Rent A/c

Select the correct answer from the options given.

Q. Classify the following accounts under personal, real or nominal accounts:

(i) Commission Paid	(ii) Commission Received
(iii) Commission Accrued	(iv) Prepaid Salaries
(v) Leasehold Property A/c	(vi) Discount Allowed
(vii) Carriage Inwards A/c	(viii) Life Insurance Corporation of India
(ix) Drawings A/c	(x) Rent Received in Advance
(xi) Debtors	(xii) Sales A/c
(xii) Rent Paid in Advance	(xiv) Bank Overdraft

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