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. Which of the following are capital expenditures to Puan Ros? Expenditure on purchasing computers is a capital expenditure as Capital expenditures vs. revenue expenditures. Required fields are marked *. It is an expenditure which affects the assets of the business. [3-4 Marks] (a) Free supply of stationary to the students by the government. a) Purchase of new car for business manager. 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. It should be noted that expe… Broadly, any expenditure that does not lead to any creation of assets or reduction in liability is treated as revenue expenditure. 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. Sales tax For example, take a quick look at this excerpt of Income Statement below to understand the accounting treatment of revenue expenditure better. These are the running expenses of the business. Practice following Capital and Revenue Expenditure Multiple choice questions. 60. replacement of a trucks battery. Capital and revenue items. expenditure. A revenue expenditure is any expense item that appears summarized on the income and expense statement for the business period. Identify whether each of the following types of expenditure are classified as capital or revenue expenditure. Raw Materials, Salaries, rent & taxes, postage etc. Capital Expenditure is a long term expenditure. Which of the following is considered a revenue expenditure? 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. Plus, capital expenditures will show up differently on your reporting metrics. Annual fire insurance premiums on plant and equipment. Revenue expenditure does not increase the efficiency of the firm. Revenue expenditures is the item of expenditures which benefits may expire within an accounting period. Which of the following should not be treated as revenue expenditure? accounting period and is in the nature of recurring and is therefore written off to P&L A/c. A. is taken into account through its effect on consumption. A. The accounting entry to record revenue expenditure is therefore as follows: D. The purchase of a pencil sharpener for $10 used in an office. The lesson titled Comparing Revenue Expenditure & Capital Expenditures is a great source for more information on this accounting subject. C. They reduce the profit of the concern. answer choices . 23. liabilities for the government. A D V E R T I S E M E N T. 4 Comments on . Mcq Added by: admin Accounting Mcqs Repaint the wall of the building. a. Answer: Option B Classify the following items into revenue expenditure and capital expenditure. 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. Revenue Expenditure is that part of government expenditure that does not result in the creation of assets. Generally, expenditure incurred on normal running of the government departments and maintenance of services is treated as revenue expenditure. The differences between capital expenditures and revenue expenditures include whether the purchases will be used over the long-term or short-term. Q. In the Keynesian model, tax revenue: A. does not appear in the aggregate expenditure function because it is always equal to government expenditure. The construction of a new wing on an existing building is descried as an. Reply. 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. Watch learning videos, swipe through stories, and browse through concepts. These short solved questions or quizzes are provided by Gkseries. And the result and benefits of this expenditure are obtained over the multiple years in the future. I think it is better to go through this MCQ’s. D. Small expenditures on long- lived assets, such as ` 20 for a paper weight. b) Paid for the certificate of entitlement of the new car. However, such expenses are not stated on the company’s Balance Sheet. 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. Billable and cost distributed. Capital Expenditure attempts to improve the earning capacity of the entity. 2) Redecoration. The revenue expenditures take place after a fixed asset had been put into service and … Capital expenditure is not matched with the capital receipts. Delivery costs on newly purchased equipment. Your email address will not be published. B. Annual fire insurance premiums on Plant and Equipment Customize assignments and download PDF’s, Determination of Equilibrium and Investment Multiplier. This expenditure might be written off in the same financial year or over a period of a few years. Start the Capital or Revenue Expenditure Quiz. 1) Repair Walls. Multiple choice questions (MCQs) Chhavi sharma . answer choices . Repay a loan of machine. D. They do not appear in the balance sheet. PLEASE COMMENT BELOW WITH CORRECT ANSWER AND ITS DETAIL EXPLANATION. They break down differently, depending on the size of the payment and the time across which it needs to be paid for. Repair a broken window of the building. Which of the following is considered a capital 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. These Mcqs are very helpful for the Preparation of various posts of Senior Auditor, Junior Auditor, Accountant and for Cost Accountant. They improve the financial position of the business. which creates assets for the government and causes reduction in The expenditure incurred for the following purposes will be treated as revenue expenditure. (c) pension paid to retired government employees. Which of the following should not be treated as a revenue expenditure? 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. benefit is going to last for more than one accounting period and hence not a revenue B. Accounting Mcqs for Preparation of various Test announced by Fpsc, kppsc, Nts, ppsc. In business, Deferred Revenue Expenditure is an expense which is incurred while accounting period. It is an expenditure that keeps an asset in working condition. Interest on loan of machine. 5) Electrical Re-wire. A. Revenue Expenditure Example. capital expenditure refers to the estimated expenditure in a fiscal year Whereas, expenditure on collection of tax is a revenue expenditure as  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. (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. Repair and maintenance on buildings b. These short objective type questions with answers are very important for Board exams as well as competitive exams. 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. Client received insurance proceeds for loss of rent and for repairing the property following exposure to a Cannabis Plant. Owner distributions are payments made to owners in the period and are considered revenue expenditures. B. These principles are not exhaustive but they serve as guidelines to solve problems… Related Articles: Capital Expenditure Meaning and Different Types of Capital Expenditure 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. 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. SURVEY . On a ready-to-accrue task. Back to: Capital and revenue items (quizzes) Show your love for us by sharing our contents. Typically, revenue expenditure incurred by a firm is reported on its Income Statement. A. year which does not create assets for the government or reduction in Reply. It will be debited from the statement of profit or loss. On the contrary, revenue expenditure aims at maintaining the earning capacity of the company. D. Small expenditures on long- lived assets, such as ` 20 for a paper weight. Insurance Proceeds covered the following. Remember Multiple choice questions are having good weightage in the total marks of … Syed alfaz . Which of the following ordinarily would be treated as a revenue expenditure rather than a capital expenditure? B. reduces equilibrium income because it reduces autonomous spending. Meaning of Revenue Expenditure. Distributions and Payments. Interest on loans and debentures giving reasons identify the following as revenue expenditure or capital. 4) Repair and rebuild Walls. C. Repair to an elevator of a five year old building. accounting mcqs for accountant. (e) repayment of loan is taken … 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 … Which of the following is NOT true of revenue expenditure? Financial Accounting Multiple Choice Questions and Answers for competitive exams. Revenue expenditures are often discussed in the context of fixed assets . (b) Economic assistance given according to Ladli scheme. Following tests are important in determining whether a par­ticular expenditure is a capital expenditure or revenue expenditure. IF YOU THINK THAT ABOVE POSTED MCQ IS WRONG. 6) New Carpets for upstairs. expenditure: (a) salary paid to army officer (b)loan given to union territories. A revenue expenditure is a cost that will be an expense in the accounting period when the expenditure takes place. It is an expenditure which involve cash. 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. You may click the link to find Multiple choice questions (Q.No-1 to 10) on Capital and Revenue Receipts and Payments.. Conversely, Revenue Expenditure is a short term expenditure. 3) Rubbish Clearance. Give reason for your answer. The following objectives are covered in this lesson: © Copyright 2016-2020 - www.PakMcqs.com/. are the some example of revenue expenditure. cost to acquire a printing press. addition. revenue expenditure refers to the estimated expenditure in a fiscal (d) interest paid on national debt. Not revenue distributed, partially distributed, or marked for revenue … C. A revenue expenditure is an expenditure whose benefit expires within the current Tags: Question 9 . repair of machinery, building, furniture etc. liabilities. Which one of the following is NOT true about revenue expenditure? Which of the following is NOT a revenue expenditure? Tags: Revenue expenditures Definition and explanation of revenue expenditures: An item of expenditure whose benefit expires within the year is revenue expenditure. 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 … E. is determined by the level of tax revenue. It’s not enough to say that capital expenditures are everything that revenue expenditures aren’t. 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. 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