Which of the following expenditures is/ are revenue expenditures?

A firm incurred Rs. 10,000 to retain the title of a land purchased for business in litigation with third party.

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Freight and cartage amounting to Rs. 4,000 were paid on purchase of raw material.

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Damages paid on account of breach of contract to supply certain goods.

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All of the above

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Solution

The correct option is D All of the above
Revenue expenditures are routine expenditures that takes place in the normal business. The assets get consumed within a year and no future benefits are available. All these expenses are for one accounting period only. These include the cost of manufacturing of product. So these are revenue expenditure.

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Similar questions

Journalise the following transaction 2016
Jan 1 Rajesh started business with cash Rs. 1,00,000 and a building valued at Rs. 5,00,000
Jan 3 Purchased goods amounting to Rs. 2,00,000 out of which goods of Rs. 1,80,000 were purchased on credit from Smith
Jan 5 Sold goods to Anil 44,000
Jan 9 Goods returned by Anil 4,000
Jan 11 Goods purchased from Karan 63,000
Jan 15 Goods returned to Karan 3,000
Jan 22 Purchased goods for cash 2,000
Jan 22 Paid cartage 100
Jan 30 Paid interest on loan 1,000

Q. State whether the following expenditure are Capital, Revenue or Deferred Revenue. Give reasons:
(i) Furniture of the book value of ₹ 10,000 were sold off at ₹ 2,500 and new furniture of the value of ₹ 6,000 were acquired, cartage on purchase ₹ 50.
(ii) Property purchased for ₹ 20,00,000 and ₹ 1,50,000 paid for its registration and legal fee.
(iii) Replacement of old machine by a new one.
(iv) Damages paid by a transport company to its passengers injured in an accident.
(v) Erection of shed for parking of vehicles at a cost of ₹ 10 Lac.

Transactions of M/s. Vipin Traders are given below.

Show the effects on Assets, Liabilities and Capital with the help of accounting Equation.

		Rs
(a)	Business started with cash	1,25,000
(b)	Purchased goods for cash	50,000
(c)	Purchase furniture from R.K. Furniture	10,000
(d)	Sold goods to Parul Traders (costing Rs 7,000 vide bill no. 5674)	9,000
(e)	Paid cartage	100
(f)	Cash Paid to R.K. furniture in full settlement	9,700
(g)	Cash sales (costing Rs 10,000)	12,000
(h)	Rent received	4,000
(i)	Cash withdrew for personal use	3,000

Q. Freight and cartage expenses paid on purchase of goods ___________________.

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.

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