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Capital and Revenue Test 6

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Capital and Revenue Test 6
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Weekly Quiz Competition
  • Question 1
    1 / -0
    Expenditures incurred in normal course of business and whose benefit expires within the year is known as_____While______is that expenditure which results in acquisition of an assets or which results in an increase in earning capacity of business.
    Solution
    A revenue expenditure is an amount that is expensed immediately—thereby being matched with revenues of the current accounting period.
    which incurred in normal course of business.
    Capital expenditureor capital expense is the money a company spends to buy, maintain, or improve its fixed assets, such as buildings, vehicles, equipment, or land. which result in an increase in earning capacity of business.
  • Question 2
    1 / -0
    Profit can be classified as ______________.
  • Question 3
    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_______________.
    Solution
    Capital expenditure :- 
    Money spent by a business or organization on acquiring or maintaining fixed 
    assets, such as land, buildings, and equipment.
    all expenses should be capitalised, which incurred until the process of acquisition of fixed asset not completed.
    So here checking the papers of property is a type of expense which incurred during the process of acquisition of land.Therefore this expense fall under capital expenditure.   
    Generally, legal fees may be currently deductible as ordinary and 
    necessary business expenses.
    This expenditure incurred after the acquisition of land. So this expense can not be capitalised.
    So suit filed against the purchaser is revenue expenditure.
  • Question 4
    1 / -0
    The main purpose of the incurring capital expenditure is to______of the business. The main purpose of incurring revenue expenditures is to ______of the business.
    Solution
    A revenue expenditure  is an amount that is expensed immediately—thereby being matched with revenue of the current accounting period., which incurred in a normal course of business. (e.g. Expenditure on Repairs of machinery maintain the machinery to work in normal capacity)
    Capital expenditure or capital expense is the money a company spends to buy, maintain, or improve its fixed assets, such as buildings, vehicles, equipment, or land. which result in an increase in earning capacity of the business. (E.g. Expenditure on upgradation improve the efficiency of machinery)
  • Question 5
    1 / -0
    Costs incurred to acquire an asset are__________but costs incurred to keep them in working condition or to defend their ownership are__________.
  • Question 6
    1 / -0
    The expired cost of a deferred revenue expense is known as ___________.
  • Question 7
    1 / -0
    Rs 10,000 spent on replacement of worn-out part of the machine will be charged as _______________.
  • Question 8
    1 / -0
    Which of the following should not be called 'Sales'?
  • Question 9
    1 / -0
    Match List I with List II and select the correct answer using the codes given below the lists.
    List I                                                            List II
    A. Heavy advertisement expenses          1. Capital expenditure
    B. Travelling expenses of the salesman  2. Revenue expenditure
    C. Profit on the sale of office building      3. Capital gain
    D. Purchase of plant and machinery        4. Deferred revenue expenditure 
    Solution
    Heavy amount spent for the advertisement of new company product is Deferred Revenue expenditure. Deferred Revenue Expenditure is an expenditure which is revenue in nature and incurred during an accounting period, but its benefits are to be derived in multiple future accounting periods.
    Capital Expenditure money spent by a business or organization on acquiring or maintaining fixed assets, such as land, buildings, and equipment.
    Capital gain is a rise in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. 
    A revenue expenditure is a cost that will be an expense in the accounting period when the expenditure takes place. 
  • Question 10
    1 / -0
    Which of the following portal revenue models involves charging for premium content?
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