Capital & Revenue Expenditure

Which of the following is Revenue Expenditure?

• Painting a premise while under construction

• Painting of premises after 2 years

• Seat covers for a new car

• Purchase of furniture for office

Which of the following is NOT capital expenditure for a cloth merchant?

• Shop Rent

• Motor Van

• Construction of shelves in the shop

• Office furniture

Which is NOT a revenue expenditure

• Cost of ink cartridges

• Purchase of paper

• Purchase of printer

• Cost of printer maintenance

Which of the following would be considered as Capital receipt?

• Receipt from cash sales

• Monthly Rent received

• Discount received

• Sales of fixed assets

If Capital expenditure is treated as revenue expenditure. It will result in

• Total assets being overstated

• Working capital being understated

• Gross profit being understated

• Net Profit being understated

Which of the following is the best explanation of Capital expenditure?

• Amount spent on purchase of fixed assets

• Amount invested by the owner

• Amount spent on running the day to day working of the business

• Amount spent on maintenance of machinery

Revenue expenditure wrongly stated as Capital expenditure will result in

• Overstated net profit and net assets

• Understated net profit

• Overstated net profit

• Understated net profit and net assets