CHAPTER 5-CAPITAL& REVENUE EXPENDITURE

Expenditures relating to the acquisition of non current assets are treated as

• capital expenditure

• revenue expenditure

• expenses

• revenue

Expenditures for the maintenance of non-current assets are treated as

• revenue expenditure

• capital expenditure

• revenue

• expenses

below are the examples of CE EXCEPT for

• Legal costs

• Installation costs

• Costs to acquire non-current assets

• Fuel for motor vehicles

below are the examples for RE EXCEPT for

• Repairs of motor vehicle

• Depreciation of non-current assets

• Installation costs

• Motor vehicle insurance

The CE will increase the value of the non currents in the

• balance sheet (statements of financial position)

• profit and loss (statements of profit and loss

• accounting equations

• journal

The RE costs will reduce the net profit at

• balance sheet (statement of financial position)

• profit and loss (statement of profit and loss)

• accounting equations

• journal

Expenditures for the Extensions or additions to buildings of non-current assets are treated as

• revenue expenditure

• capital expenditure

• revenue

• expenses

The CE costs will increase the value of NCA at

• balance sheet (statement of financial position)

• profit and loss (statement of profit and loss)

• accounting equations

• journal

If RE are wrongly classified as CE:

• The expenses will be overstated

• the net profit will be understated

• The NCAs & the capital of organization will be understated

• The NCAs & the capital of organization will be overstated

If CE are wrongly classified as RE:

• The expenses will be understated

• the net profit will be overstated

• The NCAs & the capital of organization will be understated

• The NCAs & the capital of organization will be overstated