Capital and Revenue Test 5

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Capital and Revenue Test 5

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Weekly Quiz Competition

Question 1
1 / -0

Fee paid to a lawyer for checking whether all the papers are in order before land is purchased is ___________ But if later a suit is filed against the purchaser, the legal costs will be ___________.

A
Capital expenditure, Revenue expenditure

B
Revenue expenditure, Revenue expenditure

C
Deferred Revenue expenditure, Revenue expenditure

D
Revenue expenditure, Capital expenditure
Question 2
1 / -0

The interest on calls-in-advance is paid for the period from the _________________.

A
Date of receipt of application money to the date of allotment

B
Date of receipt of allotment money to the date of appropriation

C
Date of receipt of advance money to the date of appropriation

D
Date of appropriation to the date of dividend payment
Question 3
1 / -0

Sales are equal to__________.

A
Cost of goods sold $$+$$ Gross Profit

B
Cost of goods sold $$+$$ Net Profit

C
Purchases $$+$$ Gross Profit

D
Purchases $$+$$ Cash in hand

Solution

Accounting Equation can be represented as:

Cost of Goods Sold=Opening Stock+Purchases+Direct Expenses-Closing Stock

Sales= Cost of Goods Sold + Gross Profit
Question 4
1 / -0

Which of the following is not a capital profit?

A
Profit prior to incorporation of the company

B
Profit from the sale of fixed assets

C
Premium on issue of shares

D
Compensation received on the termination of a contract

Solution

Where consideration received by assessee was only towards termination of agency, income received by assessee was to be treated as business income and not as capital gain.
Question 5
1 / -0

______________ assets are not taken into consideration under net asset method.

A
Current assets

B
Fixed assets

C
Fictitious assets

D
Tangible assets

Solution

Under net asset method, the value of all assets are added and liabilities to be deducted from the total of the assets to find out the purchase consideration.
For this calculation, fictitious assets are not to be added.
Fictitious assets are those assets which are not represented by anything concrete or tangible. There are no tangible properties behind such assets. Preliminary expenses, prepaid expenses are the examples of fictitious assets.
Question 6
1 / -0

Amount spent on a advertisement campaign, the benefit of which is likely to last for three years is a _________.

A
capital expenditure

B
revenue expenditure

C
deferred Revenue expenditure

D
none of these
Question 7
1 / -0

Choose the wrong statement ___________________.

A
Any expenditure which is unreasonably large is capital expenditure.

B
Any expenditure intended to benefit the current period is revenue expenditure.

C
Capital expenditure is any expenditure benefiting a future period.

D
Amount paid for acquiring goodwill is capital expenditure.
Question 8
1 / -0

Interest on drawings to be treated is __________________.

A
Revenue Expenditure

B
Capital Expenditure

C
Revenue Income

D
Capital Income.

Solution

It is related to normal activities of the business Credited as revenue to Trading and Profit & Loss Account of the organisation.
Interest on drawings is the interest charged on day to day routine drawings made.
Since, it is the income of the firm of recurring nature it will be treated as revenue income.
Question 9
1 / -0

Insurance received by the company is know as __________.

A
capital expenditure

B
revenue expenditure

C
capital receipt

D
revenue receipt

Solution

Capital Receipts - Receipts which are non-recurring (not received again and again) by nature and whose benefit is enjoyed over a long period are called "Capital Receipts". Capital receipts are non-business income and it arises independently, that are not considered as business income and is treated as capital gain.
Question 10
1 / -0

The expired portion of capital expenditure is shown in the ____________.

A
An expense

B
An income

C
An asset

D
A liability

Solution

An expired cost is a cost that has been recognised as an expense. This happens when a business entity fully consumes or receives benefit from a cost . An expired cost may also be construed as the total loss in value of an asset.

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Re-Attempt Weekly Quiz Competition

Capital and Revenue Test 5

Result

Capital and Revenue Test 5

Score

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Rank

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SHARING IS CARING

Question 1

Capital expenditure, Revenue expenditure

Revenue expenditure, Revenue expenditure

Deferred Revenue expenditure, Revenue expenditure

Revenue expenditure, Capital expenditure

Question 2

Date of receipt of application money to the date of allotment

Date of receipt of allotment money to the date of appropriation

Date of receipt of advance money to the date of appropriation

Date of appropriation to the date of dividend payment

Question 3

Cost of goods sold $$+$$ Gross Profit

Cost of goods sold $$+$$ Net Profit

Purchases $$+$$ Gross Profit

Purchases $$+$$ Cash in hand

Solution

Question 4

Profit prior to incorporation of the company

Profit from the sale of fixed assets

Premium on issue of shares

Compensation received on the termination of a contract

Solution

Question 5

Current assets

Fixed assets

Fictitious assets

Tangible assets

Solution

Question 6

capital expenditure

revenue expenditure

deferred Revenue expenditure

none of these

Question 7

Any expenditure which is unreasonably large is capital expenditure.

Any expenditure intended to benefit the current period is revenue expenditure.

Capital expenditure is any expenditure benefiting a future period.

Amount paid for acquiring goodwill is capital expenditure.

Question 8

Revenue Expenditure

Capital Expenditure

Revenue Income

Capital Income.

Solution

Question 9

capital expenditure

revenue expenditure

capital receipt

revenue receipt

Solution

Question 10

An expense

An income

An asset

A liability

Solution

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