Question 1. When the benefit of expenditure is available over a number of years, it is considered as capital expenditure. Redecorated the interiors in the entire property. Syed alfaz . Expenditure. 2% Thorough yet succinct application of tax law (e.g. Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 11 Capital and Revenue … Capital expenditure is reported on the statement of financial position (balance sheet) as a non-current asset. Classify whether the following is capital expenditure or revenue expenditure: a. Capital Expenditure. B) is the dollar value of the total output produced by its citizens, regardless of where they are living. This is the basis of classification between revenue expenditure and capital expenditure. Reply. b. Deferred Revenue Expenditure is revenue expenditure, incurred to receive benefits over a number of years say 3 or 5 years. These short solved questions or quizzes are provided by Gkseries. REQUIRED (a) (i) Explain the effect on Bamber’s income statement of recording capital expenditure as revenue expenditure. improvements on both revenue and expenditure side are required in order to solve the problem of budget deficit. Capital expenditures are major investments of capital to expand a company's business. Questions and Answers Chapter 2 Q1: MCQ 1. a) Revenue Expenditure b) Capital Expenditure c) Deferred Revenue Expenditure d) Not an Expenditure Q5] A firm has reported a profit of Rs.1,47,000 for the year ended 31-3-2014 after taking into consideration the following items. B1. Capital & Revenue Expenditure 20 Questions | By Sweetsalman123 | Last updated: Jan 29, 2013 | Total Attempts: 1354 Questions All questions 5 questions 6 questions 7 questions 8 questions 9 questions 10 questions 11 questions 12 questions 13 questions 14 questions 15 questions 16 questions 17 questions 18 questions 19 questions 20 questions Previous. Which one is the Capital Expenditure? Multiple-choice Questions(MCQ) 1. 3. Multiple choice questions (MCQs) Chhavi sharma . •Partly paid in advance, portion of benefit availed ,rest shown as asset in balance sheet. Start studying Capital V Revenue Expenditure - Achievement/Merit Questions. 10.2 Explain the concept of prudence in relation to the recognition of profits and losses. 10.3 Explain the term 'materiality' as it is used in accounting. The existence of this type of causal relationship was confirmed in the studies conducted by Miller and Russek (1990, 38), Owoye (1995, 20), Katrakilidis (1997, 390), Yashobanta and Behera (2012) and Takumi (2014). For example, in O’Grady v Bullcroft Main Collieries Ltd. [1932] 17 TC 93 expenditure If it creates an asset or reduces a liability, it is categorised as capital expenditure. The question are almost basic level. ITAA 1936 and ITAA 1997) to … [2] Questions (10) Publications (6,708) ... especially related to its applied capital and cost. Capital Expenditure Versus Expense Expenditure The distinction between what constitutes expense and capital expenditure can be quite blurred, as illustrated by the large volume of case law on the subject that is often apparently conflicting. Payment made to get the building permit for the construction of storage shed. Installation and testing air conditioning in the extended property ii) Revenue … Expenditure interview questions and answers on topics like types of expenditures in accounting, capital expenditures, Revenue Expenditure, effect on profitability statement, Deferred expenditures etc. These expenses are neither incurred to acquire capital assets nor the benefits of such expenditure is received in the same accounting period during which they were paid. I think it is better to go through this MCQ’s. Practical Questions. The questions are almost basic level, feels to have more standard questions….. anyway its good to have…Thanks you. Financial Statements - I 335 9.2.2 Receipts The similar treatment is given to the receipts of the business. The treatment of deferred revenue expenditure is same as of capital expenditure. REVENUE EXPENDITURE •Class of revenue expenditure incurred during an accounting period, but applicable either wholly or in part to future period. I need answers that solve methodologies to do so, thank you a lot. Notes Quiz Paper exam CBE. Nice. They are also written-off over their expected period of benefit. Questions one, two, seven and four were the most popular, question 6 the least, with student preferences being equally divided amongst the other three. Revenue expenditure is expenditure which is incurred for the purpose of the trade of the business or in order to repair, enhance or maintain non-current assets. Purchase of dust cover for the computer printer. Accounting concepts & Capital and Revenue expenditure 10.1 What is meant by the 'money measurement concept? •Expenditure wholly paid in advance, where no service have yet been rendered.eg Telephone rent. These short objective type questions with answers are very important for Board exams as well as competitive exams. ITAA 1936 and ITAA 1997). An expenditure that neither creates assets nor reduces a liability is categorised as revenue expenditure. question_answer. Syllabus B. He knows that it is important to distinguish between capital expenditure and revenue expenditure. A nation's gross domestic product (GDP): A) is the dollar value of the total output produced within the borders of the nation. Repairs of ₹ 40,000 is revenue in nature as it is done on regular basis and ₹ 1,60,000 is done on improvements which will give future benefits, therefore its capital expenditure. Indicate which of the following is capital expenditure or revenue expenditure. Objective Questions and Answers 1. Questions for freshers and experienced for bank interview, competitive exams, placement interview, finance interview, manager interview, university exams etc. Revenue expenditure results in an expense in the statement of profit or loss. It can be both capital and revenue expenditure [d] Deferred revenue expenditure. ACCOUNTING FOR TRANSACTIONS IN FINANCIAL STATEMENTS. 10.4 The historical cost convention looks backwards but the going concern convention looks forwards. Purchase of Building 2. Instead it will … [2] (ii) Explain the effect on Bamber’s balance sheet of recording capital expenditure as revenue expenditure. A capital expenditure is an amount spent to acquire or improve a long-term asset such as equipment or buildings. Ramamohan . (i) The cost of an asset Rs.23,000 has been taken as an expense If the receipts Revenue expenses are short-term expenses to meet the ongoing operational costs of running a … Reply. Expenses incurred for advertising the company’s product in local newspaper 5. F. During the year ended 31 st December 2017, Exotic Fresh LLP carried out work on it’s property. QUESTION 1: DIFFERENCE BETWEEN CAPITAL AND REVENUE EXPENDITURE Weighting Identification of material facts (issues) regarding John’s prepaid rent. Legal fees paid for assessing title deeds for purchase of building 3. Students can Download Accountancy Chapter 11 Capital and Revenue Transactions Questions and Answers, Notes Pdf, Samacheer Kalvi 11th Accountancy Book Solutions Guide Pdf helps you to revise the complete Tamilnadu State Board New Syllabus and score more marks in your examinations. Revenue (64,600 + (38,000 x 9/12) – 7,200 intra-group sales) 85,900 ... capital reserve earnings equity ... deferred development expenditure should be included within net assets for this purpose, as the net revenues expected from the development have yet to come on stream. Salaries paid to staff 4. Capital expenditure results in the appearance of a non-current asset in the statement of financial position of the business. Learn vocabulary, terms, and more with flashcards, games, and other study tools. add. It is a capital expenditure. Management accounting does form an integral part of the indicative content so questions on areas such as budgeting and variance analysis can and will appear again in future diets. Module 2: Capital & Revenue Expenditure Classify the following expenditure/income into capital and revenue with reasons: 1. Reply. Revenue Expenditure and Capital Expenditure of India! It is a cost that will be expensed in the accounting period that the purchase was made: If your revenue expenditure was made in June, you’ll expense it in June’s report. Section B: There are four (4) questions. State with reasons whether the following are capital or revenue expenditures: (i) A new machine is purchased for ₹ 60,000, ₹ 800 were spent on its carriage and ₹ 1,500 were paid as wages for its installation. income statement as an expense. 7. Revenue expenditures are for costs that are related to specific revenue transactions or operating periods, such as the cost of goods sold or repairs and maintenance expense.Thus, the differences between these two types of expenditures are as follows: The distinction between the nature of capital and revenue expenditure is important as only capital expenditure is included in the cost of fixed asset. Capital expenditure Revenue receipt Answer-21 Post-Your-Explanation-21 Show more Q&A. Gautham. Capital expenditures are for fixed assets, which are expected to be productive assets for a long period of time. 2% Identification and analysis of legal issues / legal question and relevant taxation law in regards to casino’s rental (e.g. Operating Expenditure 4010 4920 6500 Capital Expenditure 1110 2060 9850 However, due to concerns over deteriorating agency service levels, INFONT has decided that next year it will not renew the contract with its agent in the neighbouring country. B . Capital and revenue items. Attempt any three (3) questions. The following expenditures are usually treated as capital expenditures.Any expenditure which results in the acquisition of fixed assets such as land, buildings, plant and machinery, furniture and fixtures, office equipment, copyright etc. ... Find answers to questions asked by student like you. Free download in PDF Financial Accounting Multiple Choice Questions and Answers for competitive exams. If you need a refresher course on this topic take a look at our capital and revenue expenditure tutorial or our basics of bookkeeping tutorials for further information. A moment’s reflection on this will indicate that incorrect classification of expenditure will lead to a misstatement of profit. Fully deductible as revenue expenditure in the year in which it is incurred. 2015-16. C) can be found by summing C + I … In comprehensive income statement we record - i) Revenue receipt. Accounting Questions and Answers EX 10-13 Capital and revenue expenditures US Freight Lines Co. incurred the following costs related to trucks and vans used in operating its delivery service: Built an extension to it’s existing property; Bought a new computer system for the business. Compensation and remuneration to employees are done in normal course of business, therefore it is revenue expenditure. 4. 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