Deferred revenue expenditure refers to the expenditure which is revenue in nature but involves a lump sum amount and the benefits that extend for a period of more than one year. Deferred revenue expenditure should be revenue expenditure by nature in the first instance. may be treated as deferred revenue expenditure item and spread over a number of years. revenue expenditure is incurred to maintain the earning capacity. Just click the “start quiz” button and start Capital and revenue expenditure MCQs quiz. A thin line of difference exists between deferred revenue expenses and prepaid expenses. 4) Heavy expenditure … English [Auto] In this presentation we will discuss capital expenditures and revenue expenditures aimed at the difference between the two. They’re easy mistakes to make, but they can have serious unintended consequences for your business. capital and revenue expenditures and receipts . Classify the following into Capital, Revenue and Deferred Revenue expenditure, stating reasons in each case: (a) A sum of ₹ 32,000 has been spent on a machine as follows: (i) ₹ 20,000 for addition to double the output, (ii) ₹ 5,000 for repairs necessitated by negligence and (iii) ₹ … Financial Accounting Multiple Choice Questions and Answers for competitive exams. Capital. Wholly Deferred Capital Expenditure. Distinction between Capital and Revenue Expenses depends on : 1. Expenditure incurred for the daily conduct of business and the benefits of which affects only the current accounting period is recognized as revenue expenditure. ... capital and revenue 1.7 capital and revenue 1.8 student notes:- bank reconciliation statement 2.1 topic 2. bank reccnciliation state . 3. An alternative description for capitalised revenue expenditure is ‘deferred revenue expenditure’. Capital Receipts. Both help the business earn profits in present in and in following years. Revenue Expenditure. Any expenses incurred on bringing the asset into operation will be capitalized. Purpose: Relates to the acquisition of fixed assets. Take a quick Multiple Choice Questions (MCQs) test about Capital and revenue expenditures.These MCQs can help you to prepare for your exams, interviews and different tests. 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. capital expenditure opposes to revenue expenditure. Capital expenditure is defined in the Local Government 2003 Act as expenditure which, in accordance with proper accounting practices, falls to be capitalised. Deferred Revenue Expenditure. I think it is better to go through this MCQ’s. It is deferred revenue expenditure as the benefit will be derived over a … 3) Office rent paid in advance for three years. Nice. Both capital expenditure and revenue expenditure are essential for business growth as well as profit making. The question of whether expenditure is capital or revenue for tax purposes is one of tax law. (xxxvi) Revenue Expenditure: This expenditure has been incurred in the ordinary course of the business being expense o carrying on the business, therefore, it is a revenue expenditure. This Multiple Choice Questions (MCQs) quiz for Chapter Capital and revenue expenditures consists of 15 questions. Back to: Capital and revenue items (quizzes) Show your love for us by sharing our contents. Wholly Current Charge. But its matching with revenue may be deferred considering the benefit to be accrued in the future. Multiple choice questions (MCQs) Chhavi sharma . Deferred revenue expenditure. The company would derive the benefit from this revenue expenditure throughout one accounting period to some 3 to 5 years. Revenue Expenditure Treated as Capital Expenditure. Purposes of Expenses 3. With a capital expenditure, a company purchases an … Syed alfaz . Every organization spends money for various purposes, some expenses are incurred to gain more profits and some are for future profit requirements. Revenue Receipts. 1) Wages paid to workers for converting raw. 95. Capitalized Expenditure or Capitalized Expense. ♦ A thin line of difference exists between deferred revenue … But if heavy advertisement expenses are paid to introduce a new product, then, the benefit will be received for a number of years, so it is treated as deferred revenue expenditure. Capital expenditures are major investments of capital to expand a company's business. If the revenue expenditure is treated as deferred and is added to fixed assets, it is not being charged to the P&L and no deduction from profits is allowed at the outset (nor can AIAs be claimed as it is not capital expenditure). It is a capital expenditure. Wages of the workers, interest on loan taken, rent, purchase of office stationery, electricity, and daily miscellaneous expenses are revenue expenditures. Partly Current & Partly Deferred. Reply. In particular, capital spending on transport and science and technology was markedly lower. You might confuse your deferred revenue with your fulfilled revenue or with your backlog, for instance. (c) Revenue expenditure is generally recurring expenditure and capital expenditure is non-recurring by nature. Incurred for receiving or earning of income expenditure incurred on bringing the asset operation... But they can have serious unintended consequences for your objective type questions with answers are very for. Wages paid to workers for converting raw expenditure ’ the “ start quiz ” button and start capital and expenditure. By Gkseries capital expenditure, revenue capital, revenue and deferred revenue expenditure pdf by nature expenditure opposes to revenue expenditure they re... 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