Accounting Process-Books of Accounts - Capital and Revenue Expenditures (CA Foundation Principles of Accounting): Questions 5 - 11 of 12

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Question number: 5

» Accounting Process » Books of Accounts - Capital and Revenue Expenditures

Essay Question▾

Describe in Detail

What is the difference between a capital expenditure and revenue expenditure?

Explanation

Capital expenditure and revenue expenditure differ from each other on the following basis:

Distinction between capital and revenue expenditure

The basis on which capital and revenue expenditure differ from each other is explained

Basis of distinction

Capital expenditure

Revenue Expenditure

Earning Capacity

These increase the earning capacity of the business… (78 more words) …

Question number: 6

» Accounting Process » Books of Accounts - Capital and Revenue Expenditures

Short Answer Question▾

Write in Short

How is replacement of fixed assets treated?

Question number: 7

» Accounting Process » Books of Accounts - Capital and Revenue Expenditures

Short Answer Question▾

Write in Short

In what cases can an expenditure of revenue nature be treated as of capital nature?

Question number: 8

» Accounting Process » Books of Accounts - Capital and Revenue Expenditures

Essay Question▾

Describe in Detail

What is deferred revenue expenditure? Give example

Explanation

  • In an organization sometimes, there may be a few expenditures, which though might be of revenue in nature, but the benefit derived by the organization from such expenditure would be spread beyond one accounting year. These expenses are called as deferred revenue expenditures.

  • The amount of such expenditures are carried… (62 more words) …

Question number: 9

» Accounting Process » Books of Accounts - Capital and Revenue Expenditures

Essay Question▾

Describe in Detail

Can we state deferred revenue expenditure and prepaid expenses as one and the same. Justify your answer

Explanation

No, we cannot state, deferred revenue expenses and prepaid expenses as one and the same. This is because of the following differences that exist between them:

Distinction between prepaid expenses and deferred revenue expenditure

The basis on which deferred revenue expenditure differs from prepaid expenses

Basis of difference

Deferred revenue… (100 more words) …

Question number: 10

» Accounting Process » Books of Accounts - Capital and Revenue Expenditures

Short Answer Question▾

Write in Short

Classify the following transactions as Capital, revenue or deferred revenue expenditures. And justify your answer:

  1. Carriage of Rs. 750 spent on a Xerox machine purchased and installed.

  2. Advertising expenses of Rs. 200000 spent on launching a new brand of the company’s product.

  3. Car servicing charges of Rs. 2500

  4. Construction of a parking lot at the factory premises for Rs. 31, 00, 000

Question number: 11

» Accounting Process » Books of Accounts - Capital and Revenue Expenditures

Short Answer Question▾

Write in Short

State with reasons weather the following are capital or revenue in nature

  1. Overhauling expenses for second hand machinery purchased for use in business.

  2. Amount written off from the cost of fixed asset.

  3. Legal fees paid in connection with purchase of land

  4. Money paid to BSNL as security for installation of telephone lines in office premises

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