Choose the correct answer.<\/span><\/p>\nQuestion 1.
\nAmount spent on increasing the seating capacity in a cinema hall is _______.
\na) Capital expenditure
\nb) Revenue expenditure
\nc) Deferred revenue expenditure
\nd) None of the above.
\nAnswer:
\na) Capital expenditure<\/p>\n
Question 2.
\nExpenditure incurred \u20b9 20,000 for trial run of a newly installed machinery will be _______.
\na) Preliminary expense
\nb) Revenue expenditure
\nc) Capital expenditure
\nd) Deferred revenue expenditure
\nAnswer:
\nc) Capital expenditure<\/p>\n
Question 3.
\nInterest on bank deposits is _______.
\na) Capital receipt
\nb) Revenue receipt
\nc) Capital expenditures
\nd) Revenue expenditures
\nAnswer:
\nb) Revenue receipt<\/p>\n
Question 4.
\nAmount received from IDBI as a medium term loan for augmenting working capital _______.
\na) Capital expenditures
\nb) Revenue expenditures
\nc) Revenue receipts
\nd) Capital receipt
\nAnswer:
\nd) Capital receipt<\/p>\n
<\/p>\n
Question 5.
\nRevenue expenditure is intended to benefit _______.
\na) Past period
\nb) Future period
\nc) Current period
\nd) Any period
\nAnswer:
\nc) Current period<\/p>\n
Question 6.
\nPre – operative expenses are _______.
\na) Revenue expenditure
\nb) Prepaid revenue expenditure
\nc) Deferred revenue expenditure
\nd) Capital expenditure
\nAnswer:
\nd) Capital expenditure<\/p>\n
<\/p>\n
II. Very Short Answer Type Question<\/span><\/p>\nQuestion 1.
\nWhat is meant by revenue Expenditure?
\nAnswer:<\/p>\n
\n- The expenditure incurred for day to day running of the business or for maintaining the earning capacity of the business is known as revenue expenditure.<\/li>\n
- It is recurring in nature. It is incurred to generate revenue for a particular accounting period. The revenue expenditure may be incurred in relation with revenue or in relation with a particular accounting period.<\/li>\n
- For example, cost of purchases is a revenue expenditure related to sales revenue. Rent and salaries are related to a particular accounting period.<\/li>\n<\/ol>\n
Question 2.
\nWhat is capital expenditure?
\nAnswer:<\/p>\n
\n- It is an expenditure incurred during an accounting period, the benefits of which will be available for more than one accounting period.<\/li>\n
- It includes any expenditure resulting in the acquisition of any fixed asset or contributes to the revenue earning capacity of the business. It is non- recurring in nature.<\/li>\n<\/ol>\n
Question 3.
\nWhat is capital profit?
\nAnswer:
\nCapital profit is the profit which arises not from the normal course of the business. Profit on sale of fixed asset is an example for capital profit.<\/p>\n
Question 4.
\nWrite a short note on revenue receipt.
\nAnswer:
\nReceipts which are obtained in the normal course of business are called revenue receipts. It is recurring in nature. The amount received is generally small.<\/p>\n
Examples:<\/p>\n