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Question
Match List-I(Item of expenditure/receipt) with List-II(Nature of expenditure/receipt) and select the correct answer using the codes given the lists.
List-I List-II I. Carriage charges a new machine purchased for factory (a) Revenue receipt II. Legal expenses incurred in defending a case of violation of a provision of Factories Act (b) Revenue expenditure III. Grant-in-aid received from the Government for the construction of a building (c) Deferred revenue expenditure IV. Amount received for a part of the office building sublet (d) Capital expenditure (e) Capital receipt
Match List-I(Item of expenditure/receipt) with List-II(Nature of expenditure/receipt) and select the correct answer using the codes given the lists.
| List-I | List-II |
| I. Carriage charges a new machine purchased for factory | (a) Revenue receipt |
| II. Legal expenses incurred in defending a case of violation of a provision of Factories Act | (b) Revenue expenditure |
| III. Grant-in-aid received from the Government for the construction of a building | (c) Deferred revenue expenditure |
| IV. Amount received for a part of the office building sublet | (d) Capital expenditure |
| (e) Capital receipt |
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Solution
The correct option is C I-(d), II-(b), III-(e), IV-(a)
Capital expenditure, or CapEx, are funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment. This type of financial outlay is also made by companies to maintain or increase the scope of their operations.A revenue expenditure is an amount that is expensed immediately—thereby being matched with revenues of the current accounting period. Routine repairs are revenue expenditures because they are charged directly to an account such as Repairs and Maintenance Expense.
Capital receipts are a non-recurring incoming cash flow into your business, which leads to the creation of a liability (a debt to be paid in the future) and a decrease in company assets (resources that lead to capital gain)
Revenue receipts are funds received by a business as a result of its core business activities. From the above defination it is concluded that -1. Carriage charges a new machine purchased for factory is capital expenditure.2. Legal expenses incurred in defending a case of violation of a provision of Factories Act is revenue expenditure.3. Grant-in-aid received from the Government for the construction of a building is capital receipt.4. Amount received for a part of the office building sublet is revenue receipt.
Capital expenditure, or CapEx, are funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment. This type of financial outlay is also made by companies to maintain or increase the scope of their operations.
A revenue expenditure is an amount that is expensed immediately—thereby being matched with revenues of the current accounting period. Routine repairs are revenue expenditures because they are charged directly to an account such as Repairs and Maintenance Expense.
Capital receipts are a non-recurring incoming cash flow into your business, which leads to the creation of a liability (a debt to be paid in the future) and a decrease in company assets (resources that lead to capital gain)
Revenue receipts are funds received by a business as a result of its core business activities.
From the above defination it is concluded that -
1. Carriage charges a new machine purchased for factory is capital expenditure.
2. Legal expenses incurred in defending a case of violation of a provision of Factories Act is revenue expenditure.
3. Grant-in-aid received from the Government for the construction of a building is capital receipt.
4. Amount received for a part of the office building sublet is revenue receipt.
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