A. D. Small expenditures on long- lived assets, such as ` 20 for a paper weight. A. Following tests are important in determining whether a par­ticular expenditure is a capital expenditure or revenue expenditure. Billable and cost distributed. Revenue Expenditure Example. Revenue Expenditure is that part of government expenditure that does not result in the creation of assets. A. is taken into account through its effect on consumption. The differences between capital expenditures and revenue expenditures include whether the purchases will be used over the long-term or short-term. Sales tax A revenue expenditure is any expense item that appears summarized on the income and expense statement for the business period. Financial Accounting Multiple Choice Questions and Answers for competitive exams. Syed alfaz . It is an expenditure which affects the assets of the business. Capital expenditure is not matched with the capital receipts. This expenditure might be written off in the same financial year or over a period of a few years. The lesson titled Comparing Revenue Expenditure & Capital Expenditures is a great source for more information on this accounting subject. It will be debited from the statement of profit or loss. These principles are not exhaustive but they serve as guidelines to solve problems… Related Articles: Capital Expenditure Meaning and Different Types of Capital Expenditure SURVEY . Revenue expenditure does not increase the efficiency of the firm. Conversely, Revenue Expenditure is a short term expenditure. Revenue costs therefore comprise of the following: Repair costs; Maintenance charges; Repainting costs; Renewal expenses; As revenue costs do not form part of the fixed asset cost, they are expensed in the income statement in the period in which they are incurred. (c) pension paid to retired government employees. a) Purchase of new car for business manager. a. Annual fire insurance premiums on plant and equipment. Which of the following is considered a capital expenditure? Which of the following is NOT a revenue expenditure? Interest on loan of machine. © Copyright 2016-2020 - www.PakMcqs.com/. 3) Rubbish Clearance. cost to acquire a printing press. Deferred Revenue Expenditure: This is a revenue expenditure, the benefit of which is not confined to one accounting year - it extends to future accounting year or years also. 5) Electrical Re-wire. Interest on loans and debentures Remember Multiple choice questions are having good weightage in the total marks of … accounting mcqs for accountant. Nice. Identify whether each of the following types of expenditure are classified as capital or revenue expenditure. Revenue expenditures Definition and explanation of revenue expenditures: An item of expenditure whose benefit expires within the year is revenue expenditure. benefit is going to last for more than one accounting period and hence not a revenue which creates assets for the government and causes reduction in 4) Repair and rebuild Walls. The following objectives are covered in this lesson: 2) Redecoration. 6) New Carpets for upstairs. Whereas, expenditure on collection of tax is a revenue expenditure as  Multiple choice questions (MCQs) Chhavi sharma . Which of the following should not be treated as a revenue expenditure? On the contrary, revenue expenditure aims at maintaining the earning capacity of the company. Your email address will not be published. Deferred revenue expenditure is an expenditure which is incurred in the present accounting period but its benefits are incurred in the following or the future accounting periods. Tags: Practice following Capital and Revenue Expenditure Multiple choice questions. 1) Repair Walls. Your email address will not be published. Which of the following is NOT true of revenue expenditure? These Mcqs are very helpful for the Preparation of various posts of Senior Auditor, Junior Auditor, Accountant and for Cost Accountant. expenditure. Classify the following items into revenue expenditure and capital expenditure. Expenditure on purchasing computers is a capital expenditure as C. A revenue expenditure is an expenditure whose benefit expires within the current accounting period and is in the nature of recurring and is therefore written off to P&L A/c. Revenue expenditures is the item of expenditures which benefits may expire within an accounting period. b) Paid for the certificate of entitlement of the new car. Revenue expenditure refers to those expenditures which are incurred during normal business operation by the company, benefit of which will be received in the same period and the example of which includes rent expenses, utility expenses, salary expenses, insurance expenses, commission expenses, manufacturing expenses, legal expenses, postage and printing … are the some example of revenue expenditure. Which of the following is considered a revenue expenditure? Typically, revenue expenditure incurred by a firm is reported on its Income Statement. Owner distributions are payments made to owners in the period and are considered revenue expenditures. Annual fire insurance premiums on Plant and Equipment Raw Materials, Salaries, rent & taxes, postage etc. A D V E R T I S E M E N T. 4 Comments on . Which of the following ordinarily would be treated as a revenue expenditure rather than a capital expenditure? Answer: Option B IF YOU THINK THAT ABOVE POSTED MCQ IS WRONG. Give reason for your answer. Repaint the wall of the building. C. They reduce the profit of the concern. Legal expenses incurred in defending a suit for breach of contract for supply of goods does not satisfy the prerequisites of a deferred revenue expenditure. The replacement of a major component of a building c. An addition to an existing building d. Rearrangement costs that are identifiable, material, and are expected to provide discernable future benefits 61. B. reduces equilibrium income because it reduces autonomous spending. Capital Expenditure is a long term expenditure. The construction of a new wing on an existing building is descried as an. B. These are financed out of revenue receipts. Tags: Question 9 . Revenue expenditures are often discussed in the context of fixed assets . answer choices . The expenditure incurred for the following purposes will be treated as revenue expenditure. Accounting Mcqs for Preparation of various Test announced by Fpsc, kppsc, Nts, ppsc. The revenue expenditures take place after a fixed asset had been put into service and … However, such expenses are not stated on the company’s Balance Sheet. B. A revenue expenditure is a cost that will be an expense in the accounting period when the expenditure takes place. On a ready-to-accrue task. Generally, expenditure incurred on normal running of the government departments and maintenance of services is treated as revenue expenditure. These are the running expenses of the business. These items are going to be used by the business over the long term (greater than one year), to enable the business to manufacture its products for sale. You may click the link to find Multiple choice questions (Q.No-1 to 10) on Capital and Revenue Receipts and Payments.. Revenue expenditure also includes the expenditure incurred for the purchase of raw material and stores required for manufacturing saleable goods and the expenditure incurred to maintain the- fixed assets in proper working conditions i.e. expenditure: (a) salary paid to army officer (b)loan given to union territories. Watch learning videos, swipe through stories, and browse through concepts. Plus, capital expenditures will show up differently on your reporting metrics. Reply. addition. Capital expenditure relates to expenditure on non-current assets which are held for use within the business and not for resale as part of the trade of the business. (e) repayment of loan is taken … Delivery costs on newly purchased equipment. C. A revenue expenditure is an expenditure whose benefit expires within the current In the Keynesian model, tax revenue: A. does not appear in the aggregate expenditure function because it is always equal to government expenditure. These expenditure will not increase the efficiency of the business. 60. Which of the following are capital expenditures to Puan Ros? 45 seconds . D. Small expenditures on long- lived assets, such as ` 20 for a paper weight. For example, a business might purchase a property in which to house a new production facility or an item of plant and machinery to be used in the manufacture of its products. It should be noted that expe… Deferred revenue expenditure; Capitalized revenue expenditure; 1. Repair and maintenance on buildings b. Client received insurance proceeds for loss of rent and for repairing the property following exposure to a Cannabis Plant. Start the Capital or Revenue Expenditure Quiz. E. is determined by the level of tax revenue. giving reasons identify the following as revenue expenditure or capital. C. Sales tax paid in connection with the purchase of office equipment PLEASE COMMENT BELOW WITH CORRECT ANSWER AND ITS DETAIL EXPLANATION. It’s not enough to say that capital expenditures are everything that revenue expenditures aren’t. Not revenue distributed, partially distributed, or marked for revenue … Expenditure Items: For each project selected, Oracle Projects then selects expenditure items that are eligible for revenue accrual based on the following criteria for items: Approved. Principles of Accounting, Accounting Equation, Analyzing & Classifying Transaction, Journal, Ledger, Banking Transactions, Cash book and Bank Reconciliation Statement, Bill of Exchange, Capital & Revenue, Rectification of Errors, Final Accounts, Adjustments. These short solved questions or quizzes are provided by Gkseries. revenue expenditure refers to the estimated expenditure in a fiscal Capital expenditure is recorded as a Non-Current Asset; revenue expenditure is recorded as an expense or current asset 6 Identify if the following is capital or revenue expenditure and state why. D. They do not appear in the balance sheet. Mcq Added by: admin Accounting Mcqs Q. Required fields are marked *. They improve the financial position of the business. capital expenditure refers to the estimated expenditure in a fiscal year These short objective type questions with answers are very important for Board exams as well as competitive exams. Back to: Capital and revenue items (quizzes) Show your love for us by sharing our contents. paid in connection with the purchase of office equipment is a non-recurring expenditure whose Sales tax Capital Expenditure attempts to improve the earning capacity of the entity. (d) interest paid on national debt. For example, revenue used for advertisement is deferred revenue expenditure because it will keep showing its benefits over the period of two to three years. 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. Repair a broken window of the building. liabilities for the government. repair of machinery, building, furniture etc. They break down differently, depending on the size of the payment and the time across which it needs to be paid for. liabilities. It is an expenditure that keeps an asset in working condition. Repay a loan of machine. Meaning of Revenue Expenditure. In business, Deferred Revenue Expenditure is an expense which is incurred while accounting period. accounting period and is in the nature of recurring and is therefore written off to P&L A/c. [3-4 Marks] (a) Free supply of stationary to the students by the government. Whereas, expenditure on collection of tax is a revenue expenditure as revenue expenditure refers to the estimated expenditure in a fiscal year which does not create assets for the government or … D. The purchase of a pencil sharpener for $10 used in an office. A. B. Insurance Proceeds covered the following. year which does not create assets for the government or reduction in Broadly, any expenditure that does not lead to any creation of assets or reduction in liability is treated as revenue expenditure. I think it is better to go through this MCQ’s. (b) Economic assistance given according to Ladli scheme. (adsbygoogle = window.adsbygoogle || []).push({}); PakMcqs.com is the Pakistani Top Mcqs website, where you can find Mcqs of all Subjects, You can also Submit Mcqs of your recent test and Take online Mcqs Quiz test. Distributions and Payments. replacement of a trucks battery. It is an expenditure which involve cash. Which one of the following is NOT true about revenue expenditure? Which of the following should not be treated as revenue expenditure? For example, take a quick look at this excerpt of Income Statement below to understand the accounting treatment of revenue expenditure better. Capital and revenue items. 23. 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