Capital and Revenue Expenditure Quiz
6 multiple-choice questions with answers and explanations · 2 easy, 3 medium, 1 hard
Telling capital expenditure from revenue expenditure, capital and revenue receipts, and what happens to profit when one is treated as the other.
- 1Capital or Revenue Expenditure: Repairing a Delivery VanThe cost of routine repairs to a delivery van is:easy
- 2What Is Revenue Expenditure?Revenue expenditure is spending that:easy
- 3Capital or Revenue Expenditure: Extending a Building vs Repainting ItA business spends $40,000 building an extension to its offices and $3,000 repainting the existing offices. How much is capital expenditure?medium
- 4Effect of Treating Capital Expenditure as Revenue ExpenditureThe cost of a new machine was wrongly debited to Repairs Expense. Ignoring depreciation, this year’s financial statements show:medium
- 5Capital Receipt or Revenue Receipt?Which of the following is a CAPITAL receipt?medium
- 6Capital vs Revenue Expenditure: Effect of the Error on Profit After DepreciationMachinery costing $10,000 was wrongly charged to Repairs. Machinery is depreciated at 20% straight-line with a full year’s charge in the year of purchase. By how much is profit understated?hard