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Question
Should the following be treated as final expenditure or intermediate expenditure? Give reasons for your answer.
(i) Purchase of furniture by a firm.
(ii) Expenditure on maintenance by a firm.
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Solution
(i) Expenditure made on the purchase of furniture by a firm is a final expenditure as it is purchased by the firm for long-term investment.
(ii) Expenditure on maintenance by a firm is an intermediate expenditure. This is because such expenditure is made to enhance the already existing operations of the firm.
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