Purchase of fixed asset is ________________.

Capital receipt

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Capital Expenditure

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Revenue receipt

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None

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Solution

The correct option is B Capital Expenditure
Capital expenditure refers to funds that are used by a company for the purchase, improvement, or maintenance of long-term assets. Such assets can also be considered to be "fixed assets", as they can contribute to a big portion of the company's fixed costs associated with production.

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Similar questions

Q. Purchase of a fixed asset by a non-profit organization will be shown in _____________.

Funds required for purchasing current assets is an example of

(a) Fixed capital requirement

(b) Ploughing back of profits

(d) Lease financing

Q. Interest on loan taken for the purchase of fixed assets is a ____________.

Assuming that the Debt-Equity Ratio is 2 : I, state, giving reasons, which of the following transactions would (I) Increase; (ii) Decrease; (ii.) Not alter the Debt-Equity Ratio :

(i) Issue of new shares (Preference/Equity) for Cash.

(ii) Issue of new shares (Preference/Equity) against purchase of fixed asset.

(iii) Buy-back of its own shares by a Company.

(iv) Issue of Debentures for Cash.

(v) Issue of Debentures against purchase of fixed asset.

(vi) Repayment of Long-term Borrowings.

(vii) Conversion of Debentures into Equity Shares/Preference Shares.

(viii) Sale of a fixed asset at par.

(ix) Sale of a fixed asset at profit.

(x) Sale of a fixed asset at loss.

(xi) Purchase of a fixed asset on a credit of 2 months.

(xii) Purchase of a fixed asset on long-term deferred payment basis.

(xiii) Issue of Bonus Shares.

When a fixed asset is bought as hire purchase, interest element is classified under ___.

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