Lesson 21_Expenditure & Income

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

• Payment of electricity bill

• Purchase of office stationery

• Purchase of a delivery van

• Wages paid to temporary workers

What distinguishes capital expenditure from revenue expenditure?

• Capital expenditure is recurring; revenue expenditure is not

• Capital expenditure is for short-term use; revenue expenditure is for long-term use

• Capital expenditure benefits multiple accounting periods; revenue expenditure benefits one

• Capital expenditure includes rent and utilities

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

• Purchase of a new building

• Repairs to office equipment

• Extension of a factory

• Purchase of machinery

The cost of installing new machinery should be classified as:

• Revenue expenditure

• Operating expense

• Capital expenditure

• Administrative expense

Why is revenue expenditure not recorded in the Statement of Financial Position?

• It has no financial impact

• It only benefits the current accounting period

• It is always refunded

• It does not involve cash

Which of the following would not be included in the cost of a non-current asset (capital expenditure)?

• Freight charges on machinery

• Installation costs

• Routine maintenance costs

• Purchase price of the asset

A company repaints its office walls. This cost should be recorded as:

• Capital expenditure

• Deferred revenue

• Revenue expenditure

• Non-operating income

Which of the following is most likely a capital expenditure for a retail business?

• Advertising costs

• Purchase of new point-of-sale system

• Rent for showroom space

• Monthly salaries

An amount spent on upgrading software to add new features would be considered:

• Revenue expenditure

• Capital expenditure

• Financing activity

• Irregular expense

Which statement best explains the treatment of capital expenditure in financial statements?

• It is expensed immediately in the income statement

• It is recorded as a liability

• It is added to the asset and used over time

• It is shown under equity