Goyal Brothers Prakashan solutions for Commercial Studies [English] Class 10 ICSE chapter 6 - Capital and Revenue Expenditure/Income [Latest edition]

Legal expenses incurred to purchase land are ______.

Which of the following is a capital transaction?

Expenditures incurred to acquire fixed assets are called ______.

An expenditure is Revenue expenditure if ______.

Capital expenditure is incurred for ______.

Money received by sale of machine is a ______.

Revenue expenditure is incurred ______.

An expenditure is a capital expenditure when ______.

Period of benefit of capital expenditure is ______.

Premium received on issue of shares is a ______.

Fixed assets lose part of their value every year due to wear and tear with passage of time, such reduction is called ______ on fixed assets.

Fees and commission received for services rendered, interest and dividend received an investment are examples of ______.

Carriage, freight, octroi duty, customs duty, clearing charges, dock dues, and excise duty paid on machinery are examples of ______.

Expenditures incurred to acquire fixed assets are called ______.

This expenditure relates to normal functioning of the government departments and provision of various government services. The main examples of such expenditures are salaries, pensions, interest, subsidies, grants to the state governments, etc.

Capital receipts are usually obtained in case of a company:

Purchased a computer for office is which type of expenditure?

A receipt is a capital receipt:

An expenditure is Deferred revenue expenditure because ______.

Which of the following type of expenses are included in Revenue expenditure?

Expenses incurred to repair a second-hand machine, purchase by the firm, to make it usable are treated under which expenditure?

Which of the following type of expenses are included in capital expenditure?

Rent received and commission received are examples of ______.

______ expenditure is incurred for meeting day to day expenses of business and its benefit is exhausted within the current accounting year.

The accounting treatment for revenue expenditure like rent paid insurance etc. is ______.

______ is an example of Capital Expenditure.

Heavy advertising expenses, heavy repairs, expenditure to move the business to a more convenient location are examples of ______.

______ involves creation of liability and is shown on the liabilities side of the balance sheet.

Non-recurring receipts like additional capital, loan, etc. are ______.

Match the Column I and Column II:

Match the Column I and Column II:

Match the Column I and Column II:

Define Capital expenditure. 

Give four examples of capital expenditure.

What is meant by Revenue Expenditure?

What is meant by Deferred Revenue Expenditure?

Give six examples of revenue expenditure becoming capital expenditure.

Define Capital receipts.

Give two examples of Capital receipts.

What are revenue receipts?

Give three examples of Revenue receipts.

Distinguish between Capital Expenditure and Revenue Expenditure.

Define Capital Profit.

Give one example of Capital Profit.

What is Revenue Profit?

Give an example of Revenue Profit.

What do you understand by Turnover?

Mention any two ratios on the basis of profitability.

Distinguish between Capital Receipts and Revenue Receipts.

Define Capital expenditure. 

Define Capital receipts.

Distinguish between Capital Expenditure and Revenue Expenditure.

Explain the rules for deciding whether an expenditure is of capital nature.

Explain the rules for deciding whether an expenditure is of revenue nature.

Why is it necessary to differentiate between capital and revenue items in accounting?

Give four examples of capital expenditure.

Give five examples of revenue expenditure.

Distinguish between capital receipt and revenue receipt.

Distinguish, with the help of example between Capital Losses and Revenue Losses.

Distinguish, with the help of example between Capital Profits ad Revenue Profits.

What is meant by Revenue Expenditure?

What is meant by Deferred Revenue Expenditure?

How deferred revenue expenditure is treated in accounts? Give examples.

Distinguish between Capital Expenditure and Revenue Expenditure.

'Whether an expenditure is of revenue or capital nature, is a question of fact and must depend on the circumstances of each case." Comment, giving appropriate examples.

______ expenditure is an expenditure benefiting the future period.

An expenditure benefiting the current year is ______ expenditure.

Expenditure incurred to ______ the asset is capital expenditure.

Expenditure incurred to maintain the assets is ______ expenditure.

Revenue expenditure, the impact of which is likely to last for more than one year, is ______ expenditure.

Amount received on sale of assets is a ______ receipt.

Amount received on sale of stock-in-trade is a ______ receipt.

Embezzlement of cash by a cashier ______ is a revenue loss. 

Distinction between capital and revenue items is important for the preparation of ______.

Amount obtained from a customer previously written off as bad debt is a ______ receipt.

Premium received on the issue of shares is a ______ profit.

An expenditure is a capital expenditure because ______.

Revenue expenditure is incurred ______.

A receipt is a capital receipt because ______.

A loss is a capital loss because ______.

Wages paid for erection of a machinery are debited to ______.

Premium received on issue of shares is a ______.

Classify the following:

Cost of goods purchased for resale.

Classify the following:

Amount paid to an engineer for installation of machinery.

Classify the following:

Interest paid on a loan.

Classify the following:

Purchase of stationery.

Classify the following:

Insurance premium.

Classify the following:

Advertising expenses for introduction of a new product in the market.

Classify the following:

Renewal fee for a lease of land.

Classify the following:

Cost of shifting the stock to the new site.

Classify the following:

Cost of converting a petrol engine into a diesel engine.

Classify the following:

Cost of increasing the seating capacity in a cinema hall.

Which of the following are Capital Expenditure, Revenue Expenditure and Deferred Revenue Expenditure?

Wages paid to workers for installation of machinery in the factory.

Classify the following:

Purchase of stationery.

Which of the following are Capital Expenditure, Revenue Expenditure and Deferred Revenue Expenditure?

Research and development expenses.

Which of the following are Capital Expenditure, Revenue Expenditure and Deferred Revenue Expenditure?

Amount paid by a publisher for acquiring copyright.

Which of the following are Capital Expenditure, Revenue Expenditure and Deferred Revenue Expenditure?

Cost of painting the name of the company and other advertisement message on a newly purchased delivery van.

Which of the following are Capital Expenditure, Revenue Expenditure and Deferred Revenue Expenditure?

Wages, salaries and rent outstanding.

Which of the following are Capital Expenditure, Revenue Expenditure and Deferred Revenue Expenditure?

Amount paid for acquiring goodwill.

Which of the following are Capital Expenditure, Revenue Expenditure and Deferred Revenue Expenditure?

Depreciation on fixed assets.

Which of the following are Capital Expenditure, Revenue Expenditure and Deferred Revenue Expenditure?

Cost of rehabilitating the operating efficiency of a used property acquired by the company.

Any expenditure which is unreasonably heavy is capital expenditure. 

Loss on sale of fixed assets is a capital loss.

Any expenditure intended to benefit the current period is revenue expenditure.

Cartage paid on purchase of machinery is a revenue expenditure.

Amount spent on advertisement campaign, the benefit of which is likely to last for three years, is deferred revenue expenditure.

Any expenditure incurred to reduce the operating expenses is revenue expenditure.

Premium paid on issue of shares is a capital receipt.

A receipt in substitution of an income is revenue receipt.

Compensation received for the surrender of a right is a revenue receipt.

Any lump sum receipt is always a capital receipt.

Sale of securities by an investment company is a capital receipt.

State with reason whether the following is Capital or Revenue Expenditure:

Freight on goods sold.

State with reason whether the following is Capital or Revenue Expenditure:

Compensation paid to retrenched workers.

State with reason whether the following is Capital or Revenue Expenditure:

Cost of repairing machinery.

State with reason whether the following is Capital or Revenue Expenditure:

Brokerage paid for purchase of land.

State with reason whether the following is Capital or Revenue Expenditure:

Cartage paid to bring a new machine to the factory.

State with reason whether the following is Capital or Revenue Expenditure:

Cost of replacing the worn-out parts of a machinery.

State with reason whether the following is Capital or Revenue Expenditure:

Whitewashing of office premises.

State with reason whether the following is Capital or Revenue Expenditure:

Cost of overhauling a second-hand machine.

State whether the following is Capital, Revenue or Deferred Revenue Expenditure. 

Legal expenses for defending the ownership of a trade mark.

State whether the following is Capital, Revenue or Deferred Revenue Expenditure. 

Cost of painting the new office building.

State whether the following is Capital, Revenue or Deferred Revenue Expenditure. 

Repairs to a second-hand motor van purchased.

State whether the following is Capital, Revenue or Deferred Revenue Expenditure. 

Brokerage paid on the issue of shares.

State whether the following is Capital, Revenue or Deferred Revenue Expenditure. 

Cost of registration of a new company.

State whether the following is Capital, Revenue or Deferred Revenue Expenditure. 

Cost of removing the stock to a better located site.

State whether the following is Capital, Revenue or Deferred Revenue Expenditure. 

Purchase of raw materials.

State whether the following is Capital, Revenue or Deferred Revenue Expenditure. 

Cartage paid on purchase of furniture.

State whether the following is Capital, Revenue or Deferred Revenue Expenditure. 

Damages paid by a transport company to its passengers injured in an accident.

State whether the following is Capital, Revenue or Deferred Revenue Expenditure. 

Advertisement expenditure

Classify the following into Capital, Revenue and Deferred Revenue Expenditures, reason for your answer.

₹ 20,000 spent on dismantling, removing and reinstalling plant and machinery.

Classify the following into Capital, Revenue and Deferred Revenue Expenditures, reason for your answer.

Legal expenses ₹ 5,000 on defending a suit for breach of contract to supply goods.

Classify the following into Capital, Revenue and Deferred Revenue Expenditures, reason for your answer.

Premium ₹ 8,000 given for a lease.

Classify the following into Capital, Revenue and Deferred Revenue Expenditures, reason for your answer.

₹ 10,000 paid as commission on the issue of debentures.

Classify the following into Capital, Revenue and Deferred Revenue Expenditures, reason for your answer.

Temporary huts built at a cost of ₹ 3,000 for construction of factory buildings. The huts were demolished when the factory building was ready.

Classify the following into Capital, Revenue and Deferred Revenue Expenditures, reason for your answer.

₹ 15,000 paid for obtaining a mortgage.

Classify the following into Capital, Revenue and Deferred Revenue Expenditures, reason for your answer.

Preliminary expenses.

Classify the following into Capital, Revenue and Deferred Revenue Expenditures, reason for your answer.

Replacement of old machine by a new one.

Classify the following into Capital, Revenue and Deferred Revenue Expenditures, reason for your answer.

Wage paid for extension of office premises.

State whether the following expense is Capital or Revenue.

Cost of raising a loan.

State whether the following expense is Capital or Revenue.

Excise duty paid to the Government.

State whether the following expense is Capital or Revenue.

Charges paid for registration of a trade mark.

State whether the following expense is Capital or Revenue.

Commission paid to agents.

State whether the following expense is Capital or Revenue.

Legal expenses incurred for defending a suit of income tax.

State whether the following expense is Capital or Revenue.

Purchase of postage and stationery.

State whether the following expense is Capital or Revenue.

Purchase of typewriters for resale.

State whether the following expense is Capital or Revenue.

Interest paid on bank overdraft.

State whether the following expense is Capital or Revenue.

Fire insurance premium on premises.

State whether the following expense is Capital or Revenue.

Purchase of a computer for the office.

State, whether you would consider the following as Capital Expenditure or Revenue Expenditure.

Purchase of two typewriters.

State, whether you would consider the following as Capital Expenditure or Revenue Expenditure.

Purchase of typewriter ribbons.

State, whether you would consider the following as Capital Expenditure or Revenue Expenditure.

Repairs of typewriters.

State, whether you would consider the following as Capital Expenditure or Revenue Expenditure.

Overhaul expenses of second hand typewriters purchased.

State, whether you would consider the following as Capital Expenditure or Revenue Expenditure.

Expenses incurred for obtaining a license for running cinema hall.

State, whether you would consider the following as Capital Expenditure or Revenue Expenditure.

Legal fees paid to acquire a building.

State, whether you would consider the following as Capital Expenditure or Revenue Expenditure.

Cost of director's trip abroad for purchase of a new plant.

Classify the following into Capital and Revenue Expenditure.

Wages paid to workers for installation of machinery in the factory. 

Classify the following into Capital and Revenue Expenditure.

Freight on goods purchased.

Classify the following into Capital and Revenue Expenditure.

Whitewashing of office building.

Classify the following into Capital and Revenue Expenditure.

Money spent on extension of factory premises.

Classify the following into Capital and Revenue Expenditure.

Cost of uniform distributed among workers.

Classify the following into Capital and Revenue Expenditure.

Import duty on raw materials purchased.

In the following case indicate the amount to be debited as Capital Expenditure and Revenue Expenditure: 

A sum of ₹ 40,000 was spent on a machine consisting of ₹ 30,000 for increasing its production capacity, ₹ 1,000 for repairs and ₹ 9000 for replacement of worn-out parts.

In the following case indicate the amount to be debited as Capital Expenditure and Revenue Expenditure: 

A new machine is purchased for ₹ 25,000, ₹ 500 are spent on its carriage and ₹ 1,500 were paid as wages for its installation.

In the following case indicate the amount to be debited as Capital Expenditure and Revenue Expenditure: 

₹ 5,000 paid as brokerage and ₹ 2,500 other expenses on issue of shares.

In the following case indicate the amount to be debited as Capital Expenditure and Revenue Expenditure: 

Furniture of the book value of ₹ 15,000 was sold off at ₹ 10,000. New furniture was purchased for ₹ 20,000 and ₹ 100 was paid as cartage on it.

In the following case indicate the amount to be debited as Capital Expenditure and Revenue Expenditure: 

A total expenditure of ₹ 50,000 was incurred on factory buildings out of this 20% related to repairs and 80% related to extensions.

In the following case indicate the amount to be debited as Capital Expenditure and Revenue Expenditure: 

Second hand motor van worth ₹ 60,000 was purchased and repairing of this cost ₹ 8,000.

Define Capital expenditure. 

Give four examples of capital expenditure.

Define Capital receipts.

Give two examples of Capital receipts.

What is meant by Deferred Revenue Expenditure?

Give two examples of deferred revenue expenditure.

Give three examples of Revenue receipts.

Distinguish between Capital Receipts and Revenue Receipts.

Give one example of Capital Profit.

Classify the following into capital expenditure and revenue expenditure. 

Wages paid for installation of a machine.

Classify the following into capital expenditure and revenue expenditure.

Money spent on incorporation of a company.

Classify the following into capital expenditure and revenue expenditure.

Money spent on overhauling of office van.

Classify the following into capital expenditure and revenue expenditure.

Repairs of office furniture.

Classify the following into capital expenditure and revenue expenditure.

Insurance premium of office building.

Classify the following into capital expenditure and revenue expenditure.

Travelling expenses paid to salesman.

Why is it necessary to differentiate between capital and revenue items in accounting?

What is meant by Revenue Expenditure?

Distinguish, with the help of example between Capital Losses and Revenue Losses.

Explain the rules for deciding whether an expenditure is of capital nature.

Explain the rules for deciding whether an expenditure is of revenue nature.

Give five examples of revenue expenditure.