Capital And Revenue Expenditure Exam: Quiz!

20 Questions | Total Attempts: 3400

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Capital And Revenue Expenditure Exam: Quiz!

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Questions and Answers
  • 1. 
    Which of the following is of capital nature?
    • A. 

      Purchase of a goods

    • B. 

      Cost of repair

    • C. 

      Wages paid for installation of machinery

    • D. 

      Rent of a factory

  • 2. 
    A second-hand car is purchased for Rs. 10,000, the amount of Rs. 1,000 is spent on its repairs, Rs. 500 is incurred to get the car registered in the owner's name and Rs. 1,200 is paid as dealer's commission. The amount debited to the card account will be:
    • A. 

      Rs.10,000

    • B. 

      Rs.10,500

    • C. 

      Rs.11,500

    • D. 

      Rs.12,700

  • 3. 
    If the repair cost is Rs. 25,000, whitewash expenses are Rs. 5,000, cost of extension of the building is Rs. 2,50,000 and of improvement in electrical wiring system is Rs. 19,000; the amount to be expensed is:
    • A. 

      Rs.2,99,000

    • B. 

      Rs.44,000

    • C. 

      Rs.30,000

    • D. 

      Rs.49,000

  • 4. 
    Rs. 200 paid as wages for erecting a machine should be debited to
    • A. 

      Repair account

    • B. 

      Machine account

    • C. 

      Capital account

    • D. 

      Furniture account

  • 5. 
    Rs. 2,500 spent on the overhaul of a machine purchased second-hand is:
    • A. 

      Capital expenditure

    • B. 

      Revenue expenditure

    • C. 

      Deferred revenue expenditure

    • D. 

      None of the above

  • 6. 
    The basic consideration(s) in the distinction between capital and revenue expenditures is/are:
    • A. 

      Nature of business.

    • B. 

      Effect on revenue generating capacity of business.

    • C. 

      Purpose of expenses.

    • D. 

      All of the above.

  • 7. 
    A bad debt recovered during the year is a:
    • A. 

      Capital expenditure

    • B. 

      Revenue expenditure

    • C. 

      Capital receipt

    • D. 

      Revenue receipt

  • 8. 
    Carriage charges paid for a new plant purchased if debited to carriage account would affect:   
    • A. 

      Plant account

    • B. 

      Carriage account

    • C. 

      Plant and carriage accounts

    • D. 

      None of the three

  • 9. 
    On January 1, 2006, Victory Ltd., purchased second-hand machinery for Rs.50,000 and spend Rs.2,000 as shipping and forwarding charges, Rs.1,000 as import duty, Rs.1,000 as carriage inwards, Rs.500 is repair charges, Rs.200 as installation charges, Rs.400 as the brokerage of the middle man and Rs.100 for an iron pad. The total cost of machinery is:
    • A. 

      Rs.55,100

    • B. 

      Rs.55,000

    • C. 

      Rs.54,600

    • D. 

      Rs.55,200

  • 10. 
    Material costing Rs.700 in the erection of the machinery and the wages 4 paid for it amounting to Rs. 400 should be debited to:
    • A. 

      Material account

    • B. 

      Wages account

    • C. 

      Purchases account

    • D. 

      Machinery account

  • 11. 
    Expenses incurred to retain the title of a building is a:
    • A. 

      Revenue expenditure

    • B. 

      Capital expenditure

    • C. 

      Deferred revenue expenditure

    • D. 

      None of the above

  • 12. 
    Rs.5,000 spent to remove a worn-out part and replace it with a new one is:
    • A. 

      Capital expenditure

    • B. 

      Revenue expenditure

    • C. 

      Deferred revenue expenditure

    • D. 

      None of the above

  • 13. 
    Rs.5,000 was spent by Mrs. Saroj in addition to machinery to increase the production capacity. The amount is:
    • A. 

      Revenue in nature

    • B. 

      Deferred revenue in nature

    • C. 

      Capital in nature

    • D. 

      Liability in nature

  • 14. 
    An old piece of furniture was purchased for Rs.10,000.It was repaired for Rs.100.The repairs account should be debited by:
    • A. 

      Rs. 10,000

    • B. 

      Rs.10,100

    • C. 

      Rs.100

    • D. 

      Nil

  • 15. 
    Rs. 5,000 incurred for up-gradation of the computer by the installation of 128 MB RAM is:
    • A. 

      Capital expenditure

    • B. 

      Deferred revenue expenditure

    • C. 

      Revenue expenditure

    • D. 

      None of the above

  • 16. 
    Rs. 5,000 spent on maintenance of plant and machinery is_______ 
    • A. 

      Capital expenditure

    • B. 

      Revenue expenditure

    • C. 

      Deferred capital expenditure

    • D. 

      None of the three

  • 17. 
    Mohan runs a restaurant. He renovates some of the old cabins to increase some space—the amount of Rs. 15,000 was incurred on the renovation. The amount to be charged to the profit and loss account is:
    • A. 

      Nil

    • B. 

      Rs.15,000

    • C. 

      Rs. 10,000

    • D. 

      None of the above

  • 18. 
    Money paid to MTNL Rs.10,000 for installing a telephone in the office is:
    • A. 

      Expens

    • B. 

      Liability

    • C. 

      Asset

    • D. 

      Revenue

  • 19. 
    Cost of a tour abroad by the sales manager to develop markets (tour was successful) is:
    • A. 

      Capital expenditure

    • B. 

      Revenue expenditure

    • C. 

      Deferred revenue expenditure

    • D. 

      Both (a) & (b)

  • 20. 
    Heavy amount spent on advertisement is______
    • A. 

      Capital expenditure

    • B. 

      Revenue expenditure

    • C. 

      Deferred revenue expenditure

    • D. 

      None of the three

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