BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which one of the following is revenue expenditure?
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Painting of a new building.
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Factory machine installation costs.
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Annual depreciation of factory machinery.
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Extension costs for office building.
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Explanation:
Detailed explanation-1: -Revenue expenditure are costs spent on fixed assets after they have been place in service. Depreciation charges, factory insurance premium, production royalty paid are all examples of revenue expenditure.
Detailed explanation-2: -Since the asset is part of normal business operations, depreciation is considered as revenue expense.
Detailed explanation-3: -Routine repairs of plant and machinery are regarded as revenue expenditure and they are charged to the Repairs and maintenance expense account.
Detailed explanation-4: -Depreciation of fixed assets is considered as a revenue expenditure since the asset is used for the daily operations of the business.
There is 1 question to complete.