Short Answer Type Questions:
Giving reason identify whether the following are final expenditures or intermediate expenditure:
(i) Expenditure on maintenance of an office building.
(ii) Expenditure on improvement of a machine in a factory.

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Solution

(i) It is treated as intermediate expenditure because it involves expenditure on goods, which are single use producer goods.
(ii) It is treated as final expenditure because it is expenditure on investment.

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Giving reasons, explain the treatment of the following while estimating national income:

(i) Expenditure on maintenance of an office building

(ii) Expenditure on adding a floor to the office building

(iii) Contribution to the provident fund by the employees

Which of the following is a final and intermediate expenditure?

(a) Purchase of furniture by an office firm

(b) Expenditure on the uniforms of the staff of the hospital

(d) Expenditure on the improvement of machinery in a factory

Calculate wages and salaries from the following data:

$G D P_{m p}$ = 4200

Depreciation = 150

NIT = - 40

Rent royalty interest = 1650

Profits = 300

Employers contribution to social security scheme = 50

Employees contribution to social security scheme = 250

Dearness allowance = 140

Mixed income = 2000

Q. Short answer type questions:
Is the following revenue expenditure or capital expenditure in the context of government budget? Give reason.
(i) Expenditure on collection of taxes.
(ii) Expenditure on purchasing computers.

Q. Classify the following expenditures as intermediate consumption expenditure and final consumption expenditure.
(i) Expenditure on research and development by Tata.
(ii) Insurance premium paid by a firm to an insurance company.
(iii) Insurance premium paid by households to an insurance company.
(iv) Expenditure on repairs and maintenance of plant and machinery.
(v) Expenditure incurred by a firm on purchase of equipments.
(vi) Advertising expenditure incurred by Airtel on promotion of Its products.
(vii) Business expenses of the employees on tour and entertainment.

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.

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Short Answer Type Questions: Giving reason identify whether the following are final expenditures or intermediate expenditure: (i) Expenditure on maintenance of an office building. (ii) Expenditure on improvement of a machine in a factory.

(i) It is treated as intermediate expenditure because it involves expenditure on goods, which are single use producer goods.(ii) It is treated as final expenditure because it is expenditure on investment.

Short Answer Type Questions:
Giving reason identify whether the following are final expenditures or intermediate expenditure:
(i) Expenditure on maintenance of an office building.
(ii) Expenditure on improvement of a machine in a factory.

(i) It is treated as intermediate expenditure because it involves expenditure on goods, which are single use producer goods.
(ii) It is treated as final expenditure because it is expenditure on investment.