BUISENESS MANAGEMENT
TAXES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following is NOT a test to distinguish a revenue expense from a capital expense?
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Once and for all test
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Gain or loss test
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Enduring benefit test
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Identifiable asset test
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Explanation:
Detailed explanation-1: -Cash Basis does not make any distinction between capital or revenue expenditure.
Detailed explanation-2: -Capital expenditures are typically one-time large purchases of fixed assets that will be used for revenue generation over a longer period. Revenue expenditures are typically referred to as ongoing operating expenses, which are short-term expenses that are used in running the daily business operations.
Detailed explanation-3: -Depreciation on fixed assets Was this answer helpful?
Detailed explanation-4: -Loss due to sale of assets. Where there is loss on selling a capital asset, it is a capital loss whereas any loss incurred during the sale of stock-in-trade is a revenue loss.
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