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Published on: 07/09/2019
Capital And Revenue Transactions
Download Tamil Nadu 11th Standard Accountancy question papers, model tests, one-mark questions, important questions, and public exam papers in PDF format. Free study materials and answer keys for TN State Board students.
Questions + Answers key
Take MCQ Accountancy Test
1.
What is meant by deferred revenue expenditure?
2.
Classify the following expenses as capital or revenue.
i) The sum of Rs.3,200 has been spent on a machine as follows:
a) Rs.2,000 for additions to double the output.
b) Rs.1,200 for repairs necessitated by negligence.
ii) Overhauling expenses of Rs.25,000 for the engine of a motor car to get better fuel efficiency.
3.
State with reasons whether the following are capital or revenue expenditure:
i. Expenses incurred in connection with obtaining a licence for starting the factory for Rs.25,000.
ii. A factory shed was constructed at a cost of Rs.2,00,000. A sum of Rs.10,000 had been incurred in the construction of temporary huts for storing building material.
iii. Overhaul expenses of second-hand machinery purchased amounted to Rs.5,000.
4.
Pre-operative expenses are ______.
Revenue expenditure
Prepaid revenue expenditure
Deferred revenue expenditure
Capital expenditure
5.
Revenue expenditure is intended to benefit ______.
Past period
Future period
Current period
Any period
6.
Interest on bank deposits is ______.
Capital receipt
Revenue receipt
Capital expenditures
Revenue expenditures
7.
8.
Amount spent on increasing the seating capacity in a cinema hall is ______.
Capital expenditure
Revenue expenditure
Deferred revenue expenditure
None of the above.
9.
What is deferred revenue expenditure? Give two examples.
10.
Distinguish between capital receipt and revenue receipt.
11.
Distinguish between capital expenditure and revenue expenditure.
12.
Identify the following items into capital or revenue.
i) Audit fees paid Rs.10,000.
ii) Labour welfare expenses Rs.5,000.
iii) Rs.2,000 paid for servicing the company vehicle.
iv) Repair to furniture purchased second hand Rs.3,000.
v) Rent paid for the factory Rs.12,000
13.
State whether they are capital and revenue.
i) Construction of building Rs.10,00,000.
ii) Repairs to furniture Rs.50,000.
iii) White-washing the building Rs.80,000
iv) Pulling down the old building and rebuilding Rs.4,00,000
1.
(i) An expenditure, which is revenue expenditure in nature, the benefit of which is to be derived over a subsequent period or periods is known as deferred revenue expenditure.
(ii) The benefit usually accrues for a period of two or more years.
(iii) It is for the time being, deferred from being charged against income.
2.
i) a) Rs.2,000 spent on additions should be treated as capital expenditure
b) Rs.1200 spent on repairs should be treated as revenue expenditure.
ii) Overhauling expenses are incurred for the engine of a motor car to get better fuel efficiency. So this expenditure should be treated as capital expenditure.
3.
i) It is a capital expenditure since it is incurred to acquire the right to carry on business.
ii) Cost of construction of building including cost of temporary huts is capital expenditure.
iii) It is a capital expenditure because overhaul expenses are incurred to put second-hand machinery in working condition to get long-term advantage.
4.
(d)
Capital expenditure
5.
(c)
Current period
6.
(b)
Revenue receipt
7.
(c)
8.
(a)
Capital expenditure
9.
(i) A heavy expenditure of revenue nature the benefit of which is to be derived over a number of years, is known as deferred revenue expenditure.
(ii) The benefit usually accrues for period of two or more years.
Examples:
(a) Preliminary expenses
(b) Research and development expenditure.
10.
| Basis | Capital receipts | Revenue receipts |
|---|---|---|
| 1. Nature | Non-recurring in nature | Recurring in nature |
| 2. Size | Amount is generally substantial | Amount is generally smaller |
| 3.Distribution | These amounts are not available for distribution as profits | The excess of revenue receipts over the revenue expenses can be used for distribution as profits. |
11.
| Basis | Capital expenditure | Revenue expenditure |
|---|---|---|
| i) Nature | It is non - recurring in nature | It is recurring in nature |
| ii) Purpose | To contribute to the revenue earning capacity of the business. | To carry on the day to day activities of the business |
| iii) Period of benefits | Its benefit is available for a longer period. | Its benefit is obtained within one accounting period. |
| iv) Effect on profit earning capacity | It increases the profit earning capacity of the business. | It maintains the profit earning capacity of the business. |
| v) Accounting treatment | It will appear on the assets side of the balance sheet. | It will be shown on the debit side of the trading and profit and loss account depending on whether direct or indirect in nature. |
12.
| S.No. | Transactions | Classification |
|---|---|---|
| i) | Audit fees paid Rs.10,000. | Revenue expenditure |
| ii) | Labour welfare expenses Rs.5,000. | Revenue expenditure |
| iii) | Rs.2,000 paid for servicing the company vehicle | Revenue expenditure |
| iv) | Repair to furniture purchased second hand Rs.3,000. | Capital expenditure |
| v) | Rent paid for the factory | Revenue expenditure |
13.
| S.No. | Transactions | Classification |
|---|---|---|
| i) | Construction of building Rs.10,00,000 | Capital expenditure |
| ii) | Repairs to furnitures Rs.50,000 | Revenue expenditure |
| iii) | White-washing the building Rs.80,000 | Revenue expenditure |
| iv) | Pulling down the old building and rebuilding Rs.4,00,000. | Capital expenditure |
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Tamilnadu Stateboard 11th Standard Subjects
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Computer Science
Physics
Chemistry
Maths
Biology
Economics
Physics
Chemistry
History
Business Maths and Statistics
Computer Science
Accountancy
Computer Applications
History
Computer Technology
Commerce
Computer Applications
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