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Question
Select the most appropriate answer from the alternatives given below and rewrite the sentence.
For a sports club, expenditure on the purchase of sports Machinery/Equipment is a ______________ expenditure.
Options
revenue
recurring
general
capital
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Solution
For a sports club, expenditure on the purchase of sports machinery/equipment is a capital expenditure.
Explanation: Expenditure incurred on the purchase of fixed assets is regarded as capital expenditure. So, the purchase of sports machinery/equipment is a capital expenditure. Such expenses are recorded on the Assets side of the Balance Sheet. However, the depreciation charged on the equipment and machinery (or any other fixed asset) is a type of revenue expenditure and is, therefore, charged to the Income and Expenditure Account.
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