Question

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

Answer 1

Heavy advertising expenditure for launching a new product is called as Deferred Revenue Expenditure.

Explanation:
Deferred revenue expenditure is a heavy expenditure, the benefit of which can be derived in more than one year. For example: advertisement expenditure.

Therefore, heavy advertisement expenditure for launching a new product is termed as deferred revenue expenditure.

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

The expenditures that are incurred on the purchase of fixed assets and are non-recurring in nature are termed as capital expenditure.