What is Capital profits?

What is meant by deferred revenue expenditure?

What is meant by revenue expenditure?

State whether the following are capital or revenue items.
i. Rs.5,000 spent towards additions to buildings.
ii. Second-hand motor car purchased for Rs.30,000 and paid Rs.2,000 as repairs immediately.
iii. Rs.10,000 was spent on painting the new factory.
iv. Freight and cartage on the new machine Rs.150, erection charges Rs.200.
v. Rs.150 spent on repairs before using a second hand car purchased recently.

State with reasons whether the following are capital or revenue or deferred revenue expenditure:
i) Advertisement expenses amounted to Rs.10 crores to introduce a new product.
ii) Expenses on freight for purchasing new machinery.
iii) Freight and insurance on the new machinery and cartage paid to bring the new machinery to the factory.

___________ is received in the normal course of business

___________ items are to be shown in the Balance sheet.

Pre-operative expenses are ______.

Amount received from IDBI as a medium term loan for augmenting working capital ______.

Expenditure incurred Rs.20,000 for trial run of a newly installed machinery will be ______.

Amount spent on increasing the seating capacity in a cinema hall is ______.

What is deferred revenue expenditure? Give two examples.

Distinguish between capital expenditure and revenue expenditure.

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

State whether the following are capital, revenue and deferred revenue.
i) Legal fees paid to the lawyer for acquiring a land Rs.20,000.
ii) Heavy advertising cost of Rs.12,00,000 spent on introducing a new product.
iii) Renewal of factory licence Rs.12,000.
iv) A sum of Rs.4,000 was spent on painting the factory.

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

(a) Capital expenditure
(b) Revenue expenditure
(c) Deferred revenue expenditure
(d) Revenue receipt

(a) Capital expenditure - Cost of acquisition of office equipment
(b) Revenue expenditure - Manufacturing expenses
(c) Deferred revenue expenditure - Repairs of plant and machinery
(d) Capital receipt - Purchase of goods for resale

Assertion (A): Relative proportion of the amount involved is considered in distinguishing between revenue expenditure and capital expenditure.
Reason (R): Cost of acquisition of land and building, computer and air-conditioner are the examples of Revenue expenditure.
Select the correct answer.
(a) Both (A) and (R) are true and is the correct explanation of (A)
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A)
(c) (A) is true, but (R) is false.
(d) (A) is false, but (R) is true.

(i) Cost of waste basket is treated as revenue expenditure.
(ii) Capital expenditure is an expenditure. incurred during an accounting period, the benefits of which will be available for more than one accounting period.
(iii) Deferred revenue expenditure is charged against income over a period of certain years.
(a) (i) is correct
(b) (ii) is correct
(c) (ii) and (iii) are correct
(d) (i), (ii) and (iii) are correct