Question

Expenses incurred by the firm to purchase a second-hand machine and make it ready for use, are treated as ______.

Options

• Capital Expenditure

• Revenue Expenditure

• Capital Receipts

• Revenue Receipts

Answer 1

Expenses incurred by the firm to purchase a second-hand machine and make it ready for use, are treated as Capital expenditure.

Explanation:

Capital Expenditures are used to buy or improve long-term assets. For example, the costs of transporting, repairing, and installing a used machine before it can be used are classified as capital expenditures. These costs are added to the object’s value and are not treated as normal business costs.