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

Expenditure incurred or purchase of fixed Asset is ______.
a) Revenue Expenditure
b) Capital Expenditure
c) Deferred revenue expenditure
d) None of these

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Solution

Expenditure incurred on purchase of Fixed Asset is Capital Expenditure.

Explanation:
The expenditure incurred in acquiring fixed assets or increasing the value of a fixed asset is termed as capital expenditure. For example, amount spent on purchase or extension of a building.

All expenses related to the day-to-day activities of a business and which are recurring in nature are termed as revenue expenditure.

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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

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

Q. Match List-I(Items of expenditure and receipt) with List-II(Nature of expenditure and receipt) and select the correct answer using the codes given the lists.

List-I	List-II
I. Premium paid for a lease hold property	(a) Revenue expenditure
II. Insurance premium paid for risks against accidental losses of properties(fixed assets)	(b) Capital receipt
III. Amount realised from the sale of securities(investment)\ purchased earlier	(c) Deferred revenue expenditure
IV. Huge sales promotion expenses	(d) Capital expenditure

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. 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 ______________.

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Select the most appropriate alternatives from those given below and rewrite the statements : Expenditure incurred or purchase of fixed Asset is ______. a) Revenue Expenditure b) Capital Expenditure c) Deferred revenue expenditure d) None of these

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

Expenditure incurred or purchase of fixed Asset is ______.
a) Revenue Expenditure
b) Capital Expenditure
c) Deferred revenue expenditure
d) None of these