GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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An expenditure in the nature of revenue enhancing activity is normally regarded as a
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Capital expenditure
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Revenue expenditure
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Deferred revenue expenditure
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None of the above
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Explanation:
Detailed explanation-1: -Expenditure incurred for normal day to day business activity are revenue expenditure. An expense incurred to enhance the capacity and gives the benefits to the business for longer duration is a capital expenditure. This will increase the value of fixed assets.
Detailed explanation-2: -Capital expenditure is the money spent by a firm to acquire assets or to improve the quality of existing ones. Revenue expenditure is the money spent by business entities to maintain their everyday operations. Capital expenses are incurred for the long-term.
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