Capital expenditure Revenue receipt Answer-21 Post-Your-Explanation-21 Capital expenditures are major investments of capital to expand a company's business. Payment made to get the building permit for the construction of storage shed. ACCOUNTING FOR TRANSACTIONS IN FINANCIAL STATEMENTS. Financial Statements - I 335 9.2.2 Receipts The similar treatment is given to the receipts of the business. Revenue expenses are short-term expenses to meet the ongoing operational costs of running a … A moment’s reflection on this will indicate that incorrect classification of expenditure will lead to a misstatement of profit. (i) The cost of an asset Rs.23,000 has been taken as an expense Legal fees paid for assessing title deeds for purchase of building 3. QUESTION 1: DIFFERENCE BETWEEN CAPITAL AND REVENUE EXPENDITURE Weighting Identification of material facts (issues) regarding John’s prepaid rent. REQUIRED (a) (i) Explain the effect on Bamber’s income statement of recording capital expenditure as revenue expenditure. Built an extension to it’s existing property; Bought a new computer system for the business. He knows that it is important to distinguish between capital expenditure and revenue expenditure. Operating Expenditure 4010 4920 6500 Capital Expenditure 1110 2060 9850 However, due to concerns over deteriorating agency service levels, INFONT has decided that next year it will not renew the contract with its agent in the neighbouring country. Objective Questions and Answers 1. 10.3 Explain the term 'materiality' as it is used in accounting. Students can Download Accountancy Chapter 11 Capital and Revenue Transactions Questions and Answers, Notes Pdf, Samacheer Kalvi 11th Accountancy Book Solutions Guide Pdf helps you to revise the complete Tamilnadu State Board New Syllabus and score more marks in your examinations. F. During the year ended 31 st December 2017, Exotic Fresh LLP carried out work on it’s property. This is the basis of classification between revenue expenditure and capital expenditure. Revenue expenditure results in an expense in the statement of profit or loss. Questions one, two, seven and four were the most popular, question 6 the least, with student preferences being equally divided amongst the other three. Accounting concepts & Capital and Revenue expenditure 10.1 What is meant by the 'money measurement concept? 7. Syllabus B. Classify whether the following is capital expenditure or revenue expenditure: a. Ramamohan . 10.2 Explain the concept of prudence in relation to the recognition of profits and losses. Purchase of Building 2. The question are almost basic level. A capital expenditure is an amount spent to acquire or improve a long-term asset such as equipment or buildings. Revenue Expenditure and Capital Expenditure of India! 2015-16. I think it is better to go through this MCQ’s. Capital & Revenue Expenditure 20 Questions | By Sweetsalman123 | Last updated: Jan 29, 2013 | Total Attempts: 1354 Questions All questions 5 questions 6 questions 7 questions 8 questions 9 questions 10 questions 11 questions 12 questions 13 questions 14 questions 15 questions 16 questions 17 questions 18 questions 19 questions 20 questions Indicate which of the following is capital expenditure or revenue expenditure. Notes Quiz Paper exam CBE. The questions are almost basic level, feels to have more standard questions….. anyway its good to have…Thanks you. Section B: There are four (4) questions. ii) Revenue … In comprehensive income statement we record - i) Revenue receipt. question_answer. The distinction between the nature of capital and revenue expenditure is important as only capital expenditure is included in the cost of fixed asset. Capital Expenditure. •Partly paid in advance, portion of benefit availed ,rest shown as asset in balance sheet. It is a capital expenditure. If the receipts The treatment of deferred revenue expenditure is same as of capital expenditure. An expenditure that neither creates assets nor reduces a liability is categorised as revenue expenditure. Revenue expenditures are for costs that are related to specific revenue transactions or operating periods, such as the cost of goods sold or repairs and maintenance expense.Thus, the differences between these two types of expenditures are as follows: Questions for freshers and experienced for bank interview, competitive exams, placement interview, finance interview, manager interview, university exams etc. 4. Capital Expenditure Versus Expense Expenditure The distinction between what constitutes expense and capital expenditure can be quite blurred, as illustrated by the large volume of case law on the subject that is often apparently conflicting. I need answers that solve methodologies to do so, thank you a lot. The following expenditures are usually treated as capital expenditures.Any expenditure which results in the acquisition of fixed assets such as land, buildings, plant and machinery, furniture and fixtures, office equipment, copyright etc. ... Find answers to questions asked by student like you. The existence of this type of causal relationship was confirmed in the studies conducted by Miller and Russek (1990, 38), Owoye (1995, 20), Katrakilidis (1997, 390), Yashobanta and Behera (2012) and Takumi (2014). Multiple choice questions (MCQs) Chhavi sharma . [2] ITAA 1936 and ITAA 1997). Capital expenditure results in the appearance of a non-current asset in the statement of financial position of the business. Questions (10) Publications (6,708) ... especially related to its applied capital and cost. B . Management accounting does form an integral part of the indicative content so questions on areas such as budgeting and variance analysis can and will appear again in future diets. These expenses are neither incurred to acquire capital assets nor the benefits of such expenditure is received in the same accounting period during which they were paid. Capital expenditures are for fixed assets, which are expected to be productive assets for a long period of time. Revenue (64,600 + (38,000 x 9/12) – 7,200 intra-group sales) 85,900 ... capital reserve earnings equity ... deferred development expenditure should be included within net assets for this purpose, as the net revenues expected from the development have yet to come on stream. For example, in O’Grady v Bullcroft Main Collieries Ltd. [1932] 17 TC 93 expenditure B1. Deferred Revenue Expenditure is revenue expenditure, incurred to receive benefits over a number of years say 3 or 5 years. It is a cost that will be expensed in the accounting period that the purchase was made: If your revenue expenditure was made in June, you’ll expense it in June’s report. 10.4 The historical cost convention looks backwards but the going concern convention looks forwards. Attempt any three (3) questions. Purchase of dust cover for the computer printer. income statement as an expense. When the benefit of expenditure is available over a number of years, it is considered as capital expenditure. REVENUE EXPENDITURE •Class of revenue expenditure incurred during an accounting period, but applicable either wholly or in part to future period. Instead it will … Capital expenditure is reported on the statement of financial position (balance sheet) as a non-current asset. Show more Q&A. These short objective type questions with answers are very important for Board exams as well as competitive exams. They are also written-off over their expected period of benefit. Installation and testing air conditioning in the extended property Redecorated the interiors in the entire property. 2% Identification and analysis of legal issues / legal question and relevant taxation law in regards to casino’s rental (e.g. Nice. Tamilnadu Samacheer Kalvi 11th Accountancy Solutions Chapter 11 Capital and Revenue … Accounting Questions and Answers EX 10-13 Capital and revenue expenditures US Freight Lines Co. incurred the following costs related to trucks and vans used in operating its delivery service: If it creates an asset or reduces a liability, it is categorised as capital expenditure. C) can be found by summing C + I … Multiple-choice Questions(MCQ) 1. These short solved questions or quizzes are provided by Gkseries. Reply. Fully deductible as revenue expenditure in the year in which it is incurred. [2] (ii) Explain the effect on Bamber’s balance sheet of recording capital expenditure as revenue expenditure. add. Questions and Answers Chapter 2 Q1: MCQ 1. Capital and revenue items. Question 1. Reply. Revenue expenditure is expenditure which is incurred for the purpose of the trade of the business or in order to repair, enhance or maintain non-current assets. Expenses incurred for advertising the company’s product in local newspaper 5. Expenditure. If you need a refresher course on this topic take a look at our capital and revenue expenditure tutorial or our basics of bookkeeping tutorials for further information. Practical Questions. Compensation and remuneration to employees are done in normal course of business, therefore it is revenue expenditure. Syed alfaz . State with reasons whether the following are capital or revenue expenditures: (i) A new machine is purchased for ₹ 60,000, ₹ 800 were spent on its carriage and ₹ 1,500 were paid as wages for its installation. Repairs of ₹ 40,000 is revenue in nature as it is done on regular basis and ₹ 1,60,000 is done on improvements which will give future benefits, therefore its capital expenditure. It can be both capital and revenue expenditure [d] Deferred revenue expenditure. Gautham. Which one is the Capital Expenditure? Module 2: Capital & Revenue Expenditure Classify the following expenditure/income into capital and revenue with reasons: 1. Expenditure interview questions and answers on topics like types of expenditures in accounting, capital expenditures, Revenue Expenditure, effect on profitability statement, Deferred expenditures etc. •Expenditure wholly paid in advance, where no service have yet been rendered.eg Telephone rent. A nation's gross domestic product (GDP): A) is the dollar value of the total output produced within the borders of the nation. Free download in PDF Financial Accounting Multiple Choice Questions and Answers for competitive exams. Start studying Capital V Revenue Expenditure - Achievement/Merit Questions. improvements on both revenue and expenditure side are required in order to solve the problem of budget deficit. Salaries paid to staff 4. b. Reply. ITAA 1936 and ITAA 1997) to … a) Revenue Expenditure b) Capital Expenditure c) Deferred Revenue Expenditure d) Not an Expenditure Q5] A firm has reported a profit of Rs.1,47,000 for the year ended 31-3-2014 after taking into consideration the following items. 2% Thorough yet succinct application of tax law (e.g. Previous. Learn vocabulary, terms, and more with flashcards, games, and other study tools. B) is the dollar value of the total output produced by its citizens, regardless of where they are living. 3. , placement interview, competitive exams the ongoing operational costs of running …... Expenditure results in an expense in the statement of profit or loss into... 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