Understanding Capital and Revenue Expenditure

What is the primary purpose of capital expenditure?

• To cover daily operational costs

• To acquire or upgrade long-term assets

• To pay employee salaries

• To settle short-term liabilities

Which of the following is typically considered a capital expenditure?

• Office supplies

• Utility bills

• Purchase of machinery

• Employee training

How are capital expenditures usually treated in accounting?

• Expensed immediately

• Capitalised and depreciated over time

• Recorded as revenue

• Written off as a loss

What is another term often used for 'other expenditures'?

• Capital expenditures

• Revenue expenditures

• Investment expenditures

• Deferred expenditures

Which of the following is NOT a characteristic of capital expenditure?

• Long-term benefit

• One-time significant cost

• Immediate expense recognition

• Tangible asset acquisition

Which of the following would be classified as a revenue expenditure?

• Building a new factory

• Repairing existing equipment

• Purchasing land

• Installing a new production line

What is the impact of capital expenditure on the statement of financial position?

• It increases liabilities

• It is recorded as an asset

• It decreases equity

• It is recorded as an expense

Which of the following is an example of a capital expenditure?

• Paying for advertising

• Buying office furniture

• Paying for utilities

• Purchasing inventory

What is the typical accounting treatment for revenue expenditures?

• Capitalised and amortised

• Expensed in the period incurred

• Recorded as a liability

• Added to equity

Which of the following best describes the nature of capital expenditures?

• Short-term and recurring

• Long-term and non-recurring

• Short-term and non-recurring

• Long-term and recurring