Question

Money spent Rs. 20,000 as travelling expenses of the directors on trips abroad for purchase of capital assets is ____________.

• A. capital expenditure
• B. revenue expenditure
• C. deferred revenue expenditure
• D. none of the above

Answer 1

Answer: (A)

capital expenditure

All incidental expenses incurred in reference to the purchase of an asset should be capitalized.

Expenses incurred on travelling for purchase of capital asset for Rs.20000 is a capital expenditure. It has to be debited to the cost of respective asset account.