Financial Accounting Multiple Choice Questions and Answers for competitive exams. replacement of a trucks battery. A revenue expenditure is a cost that will be an expense in the accounting period when the expenditure takes place. 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. Multiple choice questions (MCQs) Chhavi sharma . 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. These Mcqs are very helpful for the Preparation of various posts of Senior Auditor, Junior Auditor, Accountant and for Cost Accountant. Generally, expenditure incurred on normal running of the government departments and maintenance of services is treated as revenue expenditure. The expenditure incurred for the following purposes will be treated as revenue expenditure. Revenue expenditures Definition and explanation of revenue expenditures: An item of expenditure whose benefit expires within the year is revenue expenditure. For example, take a quick look at this excerpt of Income Statement below to understand the accounting treatment of revenue expenditure better. The accounting entry to record revenue expenditure is therefore as follows: C. Sales tax paid in connection with the purchase of office equipment a) Purchase of new car for business manager. Broadly, any expenditure that does not lead to any creation of assets or reduction in liability is treated as revenue expenditure. In business, Deferred Revenue Expenditure is an expense which is incurred while accounting period. Revenue expenditures are often discussed in the context of fixed assets . On a ready-to-accrue task. addition. Capital Expenditure attempts to improve the earning capacity of the entity. Sales tax 1) Repair Walls. Deferred revenue expenditure; Capitalized revenue expenditure; 1. Which of the following is NOT true of revenue expenditure? Repay a loan of machine. C. They reduce the profit of the concern. Capital and revenue items. The differences between capital expenditures and revenue expenditures include whether the purchases will be used over the long-term or short-term. Which of the following should not be treated as a revenue expenditure? revenue expenditure refers to the estimated expenditure in a fiscal Plus, capital expenditures will show up differently on your reporting metrics. Which of the following is considered a capital expenditure? It is an expenditure which involve cash. Conversely, Revenue Expenditure is a short term expenditure. Which of the following ordinarily would be treated as a revenue expenditure rather than a capital expenditure? accounting mcqs for accountant. 4) Repair and rebuild Walls. (e) repayment of loan is taken … 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. cost to acquire a printing press. Revenue expenditure does not increase the efficiency of the firm. Annual fire insurance premiums on Plant and Equipment Repair and maintenance on buildings b. Which of the following is considered a revenue expenditure? C. Repair to an elevator of a five year old building. These are the running expenses of the business. a. Required fields are marked *. B. Not revenue distributed, partially distributed, or marked for revenue … [3-4 Marks] (a) Free supply of stationary to the students by the government. On the contrary, revenue expenditure aims at maintaining the earning capacity of the company. These principles are not exhaustive but they serve as guidelines to solve problems… Related Articles: Capital Expenditure Meaning and Different Types of Capital Expenditure Capital expenditure is not matched with the capital receipts. You may click the link to find Multiple choice questions (Q.No-1 to 10) on Capital and Revenue Receipts and Payments.. 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. 5) Electrical Re-wire. C. A revenue expenditure is an expenditure whose benefit expires within the current Insurance Proceeds covered the following. Your email address will not be published. 6) New Carpets for upstairs. Whereas, expenditure on collection of tax is a revenue expenditure as  Syed alfaz . Your email address will not be published. D. The purchase of a pencil sharpener for $10 used in an office. A revenue expenditure is any expense item that appears summarized on the income and expense statement for the business period. 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. Answer: Option B A D V E R T I S E M E N T. 4 Comments on . Repaint the wall of the building. B. In the Keynesian model, tax revenue: A. does not appear in the aggregate expenditure function because it is always equal to government expenditure. They break down differently, depending on the size of the payment and the time across which it needs to be paid for. Delivery costs on newly purchased equipment. 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 … They improve the financial position of the business. The following objectives are covered in this lesson: 2) Redecoration. 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. A. © Copyright 2016-2020 - www.PakMcqs.com/. Which of the following are capital expenditures to Puan Ros? Q. These are financed out of revenue receipts. Reply. Tags: Question 9 . giving reasons identify the following as revenue expenditure or capital. 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