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Question

Municipal taxes of Rs.3,500 are paid in connection with a property which was purchased for Rs. 1,50,000. Payment of municipal taxes is classified as ______________.

A
Capital expenditure
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B
Revenue expenditure
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C
Deferred revenue expenditure
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D
Deferred capital expenditure
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Solution

The correct option is A Revenue expenditure
Municipal taxes of Rs.3,500 are paid in connection with a property which was purchased for Rs. 1,50,000. Payment of municipal taxes is classified as Revenue expenditure.
Because it is recurring in nature and municipal taxes are to be paid periodically.

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