Question

Select the most appropriate answers from the alternatives given below and rewrite the sentences.

For a sports club, expenditure on the purchase of sports Machinery/Equipment is a ______________ expenditure.
a) revenue
b) recurring
c) general
d) capital

Answer 1

For a sports club, expenditure on the purchase of sports machinery/equipment is a capital expenditure.

Explanation: Expenditure incurred on the purchase of fixed assets is regarded as capital expenditure. So, the purchase of sports machinery/equipment is a capital expenditure. Such expenses are recorded on the Assets side of the Balance Sheet. However, the depreciation charged on the equipment and machinery (or any other fixed asset) is a type of revenue expenditure and is, therefore, charged to the Income and Expenditure Account.