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Expense Side of Statement of Profit and Loss

Which of the ...

Question

Which of the following is/are not example of capital expenditure?

A

Purchases of land & buildings

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B

Purchases of machinery

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C

Payment of salary

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D

All of the above

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Solution

The correct option is B Payment of salary
Capital expenditure is the money a company spends to buy, maintain or improve its fixed assets. With payment of salary there is no improvement in fixed assets. Salary paid is revenue expenditure.

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