Match List-I with List-II and select the correct answer using the codes given the lists.
List-I List-II I. Heavy amount of premium on redemption of preference shares (a) Capital expenditure II. Excess of sale proceeds fixed assets over their original cost (b) Deferred revenue expenditure III. Cost of installation of an old machine (c) Capital gain IV. Freight paid on purchase of raw material (d) Revenue of expenditure
Match List-I with List-II and select the correct answer using the codes given the lists.
| List-I | List-II |
| I. Heavy amount of premium on redemption of preference shares | (a) Capital expenditure |
| II. Excess of sale proceeds fixed assets over their original cost | (b) Deferred revenue expenditure |
| III. Cost of installation of an old machine | (c) Capital gain |
| IV. Freight paid on purchase of raw material | (d) Revenue of expenditure |
The correct option is B I-(b), II-(c), III-(a), IV-(d)
Capital
expenditure - Money spent by a business or organization on acquiring or
maintaining fixed assets, such as land, building, plant & machinery etc. is
termed as capital expenditure.
Revenue expenditure -
A revenue expenditure is a cost that is expensed in the accounting year in
which it is incurred.
Deferred revenue
expenditure - It 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. These expenses are unsually large in
amount and, essentially, the benefits are consumed within the same accounting
period.
Capital gain - it is a
rise in the value of a capital asset that gives it a higher worth than a
purchase price. The gain is not realized until the asset is sold.
Therefore, in the
given question ---
1. Heavy amount of
premium of redemption of preference shares is referred in
deferred revenue expenditure.
2. Excess of sale
proceeds fixed assets over their original cost is referred in capital gain.
3. Cost of installation of an old machine is referred as capital expenditure.
4. Freight paid on purchase of
raw material is referred as revenue
expenditure.
Capital expenditure - Money spent by a business or organization on acquiring or maintaining fixed assets, such as land, building, plant & machinery etc. is termed as capital expenditure.
Revenue expenditure - A revenue expenditure is a cost that is expensed in the accounting year in which it is incurred.
Deferred revenue expenditure - It 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. These expenses are unsually large in amount and, essentially, the benefits are consumed within the same accounting period.
Capital gain - it is a rise in the value of a capital asset that gives it a higher worth than a purchase price. The gain is not realized until the asset is sold.
Therefore, in the given question ---
1. Heavy amount of premium of redemption of preference shares is referred in deferred revenue expenditure.
2. Excess of sale proceeds fixed assets over their original cost is referred in capital gain.
3. Cost of installation of an old machine is referred as capital expenditure.
4. Freight paid on purchase of raw material is referred as revenue expenditure.
