$R s .20, 00, 000$ /- spent on advertising the introduction of a new product in the market, the benefit of which will be effective for 3 to 5 years, it should be treated as ____________.

capital expenditure

No worries! We‘ve got your back. Try BYJU‘S free classes today!

deferred revenue expenditure

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

revenue expenditure

No worries! We‘ve got your back. Try BYJU‘S free classes today!

deferred capital expenditure

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is D deferred revenue expenditure
Deferred revenue expenditure are revenue in nature incurred in an accounting period but the benefits of these arrived in future period too.

Heavy expenditure on account of advertising for the introduction of a new product is an example of deferred revenue expenditure. A proportionate amount every year to be debited to the profit & loss account.

Suggest Corrections

Similar questions

Q. Select the most appropriate alternatives from those given below and rewrite the statements :

Heavy advertising expenditure for launching a new product is called as ______.
a) Capital Expenditure
b) Revenue Expenditure
c) Deferred revenue expenditure
d) None of these

Distinguish between capital and revenue expenditure and state whether the following statements are items of capital or revenue expenditure.
(a) Expenditure incurred on repairs and whitewashing at the time of purchase of an old building in order to make it usable.
(b) Expenditure incurred to provide one more exit in a cinema hall in compliance with a government order.
(c) Registration fees paid at the time of purchase of a building.
(d) Expenditure incurred in the maintenance of a tea garden which will produce tea after four years.
(e) Depreciation charged on a plant.
(f) The expenditure incurred in erecting a platform on which a machine will be fixed.
(g) Advertising expenditure, the benefits of which will last for four years.

Q. Treating capital expenditure as revenue expenditure will __________.

Q. Rs. 25,000 spent on the overhaul of second hand purchased machines would be (x) Reveille expenditure (y) Capital expenditure (z) Deferred revenue expenditure. The options are ______________.

Q. Heavy expenditure incurred on advertisement at the time of introducing a new product is a Deferred Revenue Expenditure.

Join BYJU'S Learning Program

Rs.20,00,000/- spent on advertising the introduction of a new product in the market, the benefit of which will be effective for 3 to 5 years, it should be treated as ____________.

$R s .20, 00, 000$ /- spent on advertising the introduction of a new product in the market, the benefit of which will be effective for 3 to 5 years, it should be treated as ____________.