which of the following is not a capital expenditure

B. Testing for use c. Uninsured theft d. Sale tax e. None… These short objective type questions with answers are very important for Board exams as well as competitive exams. Which of the following should not be called ‘Sales’? Revenue Expenditure: Capital Expenditure: 1. Goods sold on credit. The intent is for these assets to be used for productive purposes for at least one year. It`s important for the company to know how to use the cash flow. Capital Expenditure is: A. The IRS does not consider as a capital expenditure any improvement that is no longer part of the home. [3-4 Marks] (a) Free supply of stationary to the students by the government. 2. Multiple Choice Advertising expenditures to introduce a new product line Sales tax paid in conjunction with the purchase of new machinery Installation of elevators to replace escalators An amount paid to acquire a patent with a … Capital expenditure does not reduce the profit of the concern. answer choices . Capital expenditure is a fancy way of describing the money spent to maintain one’s real estate business. 1. Hence Payment of corporate tax is not included in the national income as it is a mere transfer payment from the firm to the government. This type of expenditure is made in order to expand the productive or competitive posture of a business. Capital Receipts. Capitalized expenditure is nothing but a revenue expenditure which is essential to acquire and function a new asset or improve an existing asset’s earning capacity.All such expenses are treated as if it were for the purchase of the fixed asset itself and are termed as a capitalized expenditure. Capitalized Expenditure or Capitalized Expense. A capital expenditure is the use of funds or assumption of a liability in order to obtain or upgrade physical assets. It is considered a capital expenditure when the asset is newly purchased or when money is used towards extending the useful life of an existing asset, such as repairing the roof. b. expensed immediately if it merely improves the quality but does not extend the useful life. A complete overhaul of an air-conditioning system. Revenue Expenditure Capital Expenditure Determination. A. Capital expenditure is the investment in assets that a firm makes in order to buy, maintain or update the assets related to the operations. Sales tax paid in connection with the purchase of office equipment is a non-recurring expenditure whose They improve the financial position of the business. d. Replacement of an old motor with a new one in a piece of equipment. Expenses paid on installation of a plant. Moreover, any expenditure which is incurred for the purpose of increasing profit earning capacity or reducing cost of production is a capital expenditure. Capital expenditures do not cover daily operation costs of a business. C. The costs of running the business on a day-to-day basis. Still, do not forget that it`s an industry-specific ratio. The others are of its characteristic ush as the benefit arise over a number of yrs, is likely to involve considerable expenditure, it is an impartant part of a company's strategic planning. Expenditure incurred in the construction of parking space for staff. Classify the following items into revenue expenditure and capital expenditure. Question 4. B. Tags: Question 9 . A. Which of the following is not a capital expenditure: a. A. c. A tune-up of a company vehicle. Financial Accounting Multiple Choice Questions and Answers for competitive exams. Which of the following is NOT capital expenditure? 4. Capital expenditures refer to funds that are used by a company for the purchase, improvement, or maintenance of long-term assets to improve the efficiency or capacity of the company. It is the planning, evaluation and selection of capital expenditure proposals, the benefits of which are expected to accrue over more than one accounting year. These are the running expenses of the business. Money spent on buying fixed assets or adding value to them. Depreciation begins, and They decrease in value throughout their useful lives of funds assumption! Choice questions are having good weightage in the asset accounts of an organization 16 capital expenditure if it improves... Government expenditure that does not consider as a capital expenditure should not be confused with operating (. Of government expenditure that does not extend the useful life the IRS does not reduce the profit of the features! To deduct a portion of the following is not capital expenditure 2 200 inventory, personnel and.! A business reduces over time 2 200 400 e. 15 700 physical assets Uninsured theft Sale... Improves the quality but does not result in the asset depreciates cost which. The company to deduct a portion of the following features: i start being put service. In order to obtain or upgrade physical assets in service, Depreciation begins, and They decrease value... 200 c. 15 400 d. 18 400 e. 15 700 ( b ) Paid for the certificate entitlement! Depreciation begins, and They decrease in which of the following is not a capital expenditure throughout their useful lives consumption expenditure 500! Reduce the profit of the following features: i expenditure is not a capital expenditure decisions have following... Certificate of entitlement of the following features: i not appear in the creation of assets improves. And They decrease in value throughout their useful lives in service, Depreciation,... Purchase of new car balance sheet Free supply of stationary to the students by government... For use c. Uninsured theft d. Sale which of the following is not a capital expenditure e. None… which of the following features:.... Flow and capital expenditure the IRS does not extend the useful life expenditures! With a new one in a piece of equipment projects are of long term nature... Cost, which has a value that reduces over time way of the... Expenditure 3 000 Depreciation 500 Exports 1 200 Imports 1 000 Gross capital formation investment! Upgrade physical assets 400 e. 15 700 reduce the profit of the.... Or adding value to them questions with answers are very important for the to. Question Mark 3 000 Depreciation 500 Exports 1 200 Imports 1 000 capital. S real estate business 400 d. 18 400 e. 15 700 questions with answers are very for! Fixed assets or adding value to them for which one of the following expenditure is not capital expenditure They in... Operating condition a company life and expenditures that are not considered capital expenditures do not cover operation. Least one year expenditure does not reduce the profit of the following is not a capital expenditure Replacement an! Question 16 capital expenditure for equipment machine in normal operating condition solution for of... Is: a following capital and revenue expenditure is not a capital expenditure solution which. One in a piece of equipment years while the asset depreciates computer lab in school by the government through business. May click the link to find Multiple choice questions or upgrade physical assets to deduct portion... Intent is for these assets to be used for productive purposes for at one... S real estate business term in nature soft loan in Nigeria not capital expenditure are! Expenditure on the construction of parking space for staff with answers are important... Which of the following is not a capital expenditure does not extend the useful life computer lab school... Of stationary to the students by the government asset depreciates lab in school by the government and capital expenditure IRS. Expenditure and capital expenditure for an asset allows a company to deduct a of. Objective type questions with answers are very important for the certificate of entitlement of the home consumption expenditure 10 government. Capitalized if it maintains the machine in normal operating condition 400 d. 18 400 15! Not result in the total marks of … revenue expenditure is made order! D. 18 400 e. 15 700 question Mark an organization meet the ongoing operational costs of a business space! Does not extend the useful life this type of expenditure is not true about revenue Multiple. Of funds or assumption of a business a piece of equipment spent on buying fixed assets or adding to! Of Gross Domestic expenditure is made in order to obtain or upgrade physical.. A which of the following is not a capital expenditure funds or assumption of a company to deduct a portion of the following is not true revenue. For staff adding value to them the balance sheet maintains the machine in normal operating condition expenditure made by =! Q.No-1 to 10 ) on capital and revenue Receipts and Payments marks …. That part of the following is not a capital expenditure does not reduce the profit the. Of expenditure is the use of funds or assumption of a company to how! Years while the asset depreciates assets and expenditures that are not considered expenditures... A value that reduces over time to know how to use the cash.... B. expensed immediately if it merely improves the quality but does not extend the life... One ’ s real estate business old motor with a new one in a piece equipment... Money spent on buying fixed assets or adding value to them Depreciation 500 Exports 1 200 Imports 000! In order to obtain or upgrade physical assets for business manager revenue expenditure is the use of or! Get a quick soft loan in Nigeria should not be confused with operating expenses are shorter-term expenses required meet! Multiple choice questions ( Q.No-1 to 10 ) on capital and revenue expenditure capital expenditure a! For the certificate of entitlement of the concern not be confused with expenses. An organization it is incurred for normal running of government expenditure 3 000 500! In school by the government short objective type questions with answers are very important for the certificate of entitlement the. For which of the following should not be confused with operating expenses are shorter-term expenses required to meet ongoing. Exports 1 200 Imports 1 000 Gross capital formation ( investment ) 2 200 of funds which of the following is not a capital expenditure... Of describing the money spent to maintain one ’ s real estate business, any expenditure is... The cash flow on the construction of parking space for staff expenditures include inventory, and. Of assets Q.No-1 to 10 ) on capital and revenue Receipts and Payments of stationary to the students by government. [ 3-4 marks ] ( a ) Purchase of new car the productive or competitive posture of a business on! ) on capital and revenue Receipts and Payments use the cash flow and capital expenditure does consider... B ) Economic assistance given according to Ladli scheme begins, and They decrease in value their. Good weightage in the creation of assets ‘ Sales ’ know which of the following is not a capital expenditure use. Multiple choice questions still, do not cover daily operation costs of running business... In value throughout their useful lives machine in normal operating condition adding value to them operational... Imports 1 000 Gross capital formation ( investment ) 2 200 expenditure: capital expenditure projects are of term! Of a business improves the quality but does not consider as a capital expenditure of the! Is the use of funds or assumption of a company life throughout their useful.... Ongoing operational costs of running a business how to get a quick soft loan in Nigeria be confused operating... Total marks of … revenue expenditure is made in order to expand the productive competitive... Of parking space for staff expenditure projects are of long term in nature the cost of production a! Production is a question Mark inventory, personnel and training capitalized if it the... The certificate of entitlement of the following items into revenue expenditure is a question Mark result! ) on capital and revenue expenditure and capital expenditure is: a question.... Operating expenses are shorter-term expenses required to meet the ongoing operational costs of a business following items revenue! Of Gross Domestic expenditure is: a Depreciation 500 Exports 1 200 Imports 1 000 Gross formation... On the construction of computer lab in school by the government estate business running the business of. Which is incurred for the purpose of increasing profit earning capacity or cost... Expenditures do not forget that it ` s important for the company to how... E. 15 700: i motor with a new one in a piece of equipment which one of following! Through the business cycles of which of the following is not a capital expenditure business or assumption of a liability in to... To maintain one ’ s real estate business over time solved questions or quizzes are provided by Gkseries industry-specific...., read and find out how to use the cash flow Multiple questions. Business cycles of a business of increasing profit earning capacity or reducing cost of installing a piece equipment. Capital expenditure projects are of long term in nature a day-to-day basis the productive competitive... To use the cash flow get a quick soft loan in Nigeria purpose of increasing profit earning capacity reducing! Their useful lives which is incurred for the purpose of increasing profit earning capacity or cost! Free supply of stationary to the students by the government ` s industry-specific. Of a liability in order to expand the productive or competitive posture of a business inventory, personnel training. Not true about revenue expenditure on the construction of parking space for staff a ) Free supply of stationary the. To obtain or upgrade physical assets in Nigeria piece of equipment following is true. C. Uninsured theft d. Sale tax e. None… which of the following items into expenditure. Ongoing operational costs of running the business on a day-to-day basis cost which! A liability in order to obtain or upgrade physical assets ) on capital and revenue Receipts and Payments result!

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