BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Discount received
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Commission received
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Interest on loan
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Dividend on investment
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Detailed explanation-1: -Paid rent is an expense for the short term and is recurring in nature so Option 3 is a revenue expenditure. Purchase of a fixed asset, by cheque, tends to increase the financial assets of the business. It is a capital expenditure so Option 1 is the correct answer as it is not a revenue expenditure.
Detailed explanation-2: -Revenue or net sales refer only to business-related income (the equivalent of earned income for an individual). If the company has other sources of income from investments, for example, the income is not considered revenue since it wasn’t the result of the primary business.
Detailed explanation-3: -Interest revenue can be defined as money earned through loaning money or money received from depositing or investing. Companies who charge interest on loans consider the interest revenue as a major source of income, which should be reported at the top of the income statement.
Detailed explanation-4: -purchase and sale of machinery is not a day to day activity unless it is a business in machinery dealing and hence, it is not a revenue expenditure.