Mr. A, a supervisor was paid Rs. Receipts are the amounts actually received. EduRev is a knowledge-sharing community that depends on everyone being able to pitch in when they know something. On completion of building construction the store was dismantled and the materials were sold for Rs. A retail trader treated a capital expenditure item as revenue expenditure. Nice. But the basic difference is capital expenditures are the long-term acquisition of fixed assets. 30,000 spent on traveling expenses of the company’s director’s to a foreign trip for purchase of an asset to be used in the production process. 2500, spent on the overhauling on purchase of second hand machinery: Brokerage on the issue of shares and debentures is a _______expenditure : A second hand car is purchased for Rs. Revenue transactions are transactions that have a short-term effect on the business. Building repairs, $3500, were debited to the Buildings account. Buildings were depreciated at 5% per annum on balance of the account at the year end. Q: Tax receipts are examples of revenue expenses or capital expense in nature? Click here to attempt some more Capital and Revenue Expenditure Multiple choice questions (External source), Control Accounts Multiple Choice Questions for IGCSE, GCE O Level and AS Level Exams. Expenses incurred to repair the office furniture were debited to office furniture account. 10,000 the amount of Rs. Click here to check your Answers for Capital and Revenue Expenditure Multiple choice questions. CA Foundation
10,000 as insurance, Rs. Amount received from IDBI as a medium term loan for augmenting working capital. This is a: Which of the following Expenses will not be included in the acquisition of plant? The account that should be debited is : If repair cost is Rs. 10,00,000 towards construction of office building. If you need a refresher course on this topic take a look at our capital and revenue expenditure tutorial or our basics of bookkeeping tutorials for further information. What is the effect of this error? the capital receipts $22,000 is not credited to profit and loss account. The While revenue expenses are short-term expenses that are for specific operating periods. Amount of Rs.5,000 spent as lawyers fee to defend a suit claiming that the firm factory site belonged to the plaintiff land is. CAPITAL AND REVENUE 1.1 TOPIC 1. Capital receipts The receipts which create corresponding liability for the government or lead to reduction in assets of the government are termed as capital receipts, e.g. 60,000 as his salary during the period of construction and he devoted 2/3rd of his time for the building construction. Financial Accounting for SHS 1 Capital and revenue expenditure and receipts past questions: theory Previous Lesson Back to Course Next Lesson $600, had been debited to motor vehicles. disinvestment of PSUs. Capital transactions are transactions that have a long-term effect on the business. Reasoning:Such damages are incurred in the ordinary course of business : Both the statements are correct and second is a correct explanation of the first, Both the statements are correct but second is not a correct but second is not a correct explanation of the first, First statement is correct but second is not, First statement is not correct but second is correct, Insurance claim received on account of machinery damaged completely by fire is, Entrance fee of Rs.2,000 received by Ram and Shyam Social club is. This contains 30 Multiple Choice Questions for CA Foundation Test: Capital And Revenue Expenditures And Receipts - 2 (mcq) to study with solutions a complete question … Capital and Revenue Expenditure and Receipts. Fuel cost for running this care is revenue expenditure and it will be used up in few days and does not add to the value of the fixed asset. expenditure: (a) salary paid to army officer (b)loan given to union territories. This contains 30 Multiple Choice Questions for CA Foundation Test: Capital And Revenue Expenditures And Receipts - 1 (mcq) to study with solutions a complete question bank. 15. Various insurance Claims. Assets and Liabilities totals will not balance in the statement of financial position. Comparison to capital and revenue expenditure receipts questions are now returned back are part of expenditure. Incorrect treatment of Capital and Revenue Expenditure and Receipts effects the profit for the year and values in the Statement of Financial Position. This test is Rated positive by 87% students preparing for CA Foundation.This MCQ test is related to CA Foundation syllabus, prepared by CA Foundation teachers. Which of the following are revenue expenditure for an office equipment dealer? the profit for the year and non-current assets? What is the effect of the error? ... Add - Direct Expenses (if available in the question) Nil Total Cost 595000 Less - Cost of Goods Sold (Cost of Sales) (COGS) (364000) Value of Closing Stock 231000 . The purchase of office furniture was wrongly recorded as repairs to furniture. The Going Concern Assumption allows the accountant to classify the expenditure as Capital Expenditures and Revenue Expenditures, capital receipts and capital revenues. (B) Repayment of loan is also capital expenditure because it reduces liability. Capital receipts. The solved questions answers in this Test: Capital And Revenue Expenditures And Receipts - 1 quiz give you a good mix of easy questions and tough questions. An amount of Rs. Buy a car is capital expenditure because its benefit to the business will be spread over a long time. What effect will this have on his accounting books? cost of extension building = 250000 Ramamohan . 2,500 spent on the overhaul of machines purchased second-hand is. the purchases account in error. So don't neglect practicing multiple choice questions. Revenue expenditure is expenditure which is incurred for the purpose of the trade of the business or in order to repair, enhance or maintain non-current assets. Usually, the effect of these transactions is only for a period of one year. It, that repairs to motor vehicles, This distinction between capital and revenue nature of the items is necessary in order to find out the correct profit or loss during the year and also to ascertain the true and fair position of the business. Deferred Revenue Expenditure is revenue expenditure, incurred to receive benefits over a number of years say 3 or 5 years. It’s not enough to say that capital expenditures are everything that revenue expenditures aren’t. The following examples and explanation helps you to c alculate and comment on the effect on profit for the year and asset valuation of the incorrect treatment of capital and revenue expenditure and capital and revenue receipts. profit for the year and non-current assets? Building repairs, $3500, were debited to the Buildings account. Capital receipts; Revenue receipts; Capital receipts Explanation: Capital receipts include the following: Receipts from the sale of fixed assets of a business. How this error affects On the other hand, sale of stock, commission received and interest on investment received are examples of revenue receipts. Capital and Revenue Expenditures and Receipts. It means that the effect of these transactions extends to a period of more than one year. The question are almost basic level. 19,000; the amount to be expensed is, Repair cost = 25000 Gautham. Click here to attempt Accounting-Daddy's Interactive MCQ Quiz. income statement showed a loss for the year of $3500. 500 is incurred to get the car registered in owner’s name and Rs. Welcome to “Capital and Revenue Expenditure and Receipts” topic. Machinery was purchased for Rs. 1,000 is spent on its repairs, Rs. An expense is a word very similar to expenditure but expense shows the deduction in the value of the asset while expenditure simply denotes the obtaining of as… i. Take your school as an example. Capital Expenditures and Revenue Expenditures; The following sources are the generators of the capital receipt: Additional capital and mentioned assets introduced by the owner or the possessor; Debentures and the other issues of debt instruments; Loans borrowed from a bank or from a financial institution. Rs. The questions are almost basic level, feels to have more standard questions….. anyway its good to have…Thanks you. Whitewash expenses = 5000 It leads to an overall increase in the total revenue of the company.These funds are generated from a firm’s operating activities hence they are shown inside trading and profit and loss account and not in a balance sheet.. Dec 22,2020 - Test: Capital And Revenue Expenditures And Receipts - 1 | 30 Questions MCQ Test has questions of CA Foundation preparation. Question: Capital receipts are not directly credited to profit and loss account. 12. The amount debited to car account will be. It was later discovered that repairs to motor vehicles, 1,500 for petrol. Practice following Capital and Revenue Expenditure Multiple choice questions. Expenses in connection with obtaining a licence for running the Cinema is Capital expenditure : Heavy advertisement expenses to introduce a new product is deferred revenue expenditure It is the process of causing a liability by a commodity. This Capital and Revenue Receipts worksheet has been prepared based on CIE past papers and CIE syllabus for O levels & AS levels. You can find other Test: Capital And Revenue Expenditures And Receipts - 1 extra questions,
giving reasons identify the following as revenue expenditure or capital. Cost of improvement in electric wiring system = 19000 Give meanings of revenue receipts and capital expenditures with one example for each. Capital expenditures vs. revenue expenditures. Before we explore this part of accounting study material at Accounting-Daddy.com, let’s examine what Cambridge wants us to learn under this title at secondary education level: Click here to Login/Sign Up. Revenue Receipt. 5,60,000 and incurred Rs. You may click the link to find Multiple choice questions (Q.No-1 to 10) on Capital and Revenue Receipts and Payments.. Example 1. Remember Multiple choice questions are having good weightage in the … 16. Loss caused by theft of cash by cashier after business hours is a : Loss of cash due to theft committed either by the employees or by the outsiders, after business hours, is a capital loss because the loss is outside the trade and not incidental to the business. Dear User, Kindly login/register to view answer & explanation of each question. This mock test of Test: Capital And Revenue Expenditures And Receipts - 2 for CA Foundation helps you for every CA Foundation entrance exam. Multiple choice questions (MCQs) Chhavi sharma . Buildings were depreciated at 5% per annum on balance of the account at the year end. What is the effect of this error? Capital and revenue items. Q.5 Which of the following statement is false? Reply. Unlike revenue expenditure, which is … (a) Capital expenditures (b) Revenue expenditures (c) Capital receipt (d) Revenue receipt 20. Difference between Capital and Revenue expenditure. Click here to Login/Sign Up. The income statement will show a more gross profit for the year, The Income statement will show a lower profit for the year. CAPITAL AND REVENUE EXPENDITURES AND RECEIPTS . The capitalized cost of office building was: Capital expenditure provide ………………….benefit: Amount received from IDBI as a medium term loan for augmenting working capital is, Rs. 1,200 is paid as dealer’s commission. Reply. Capital Expenditures and Revenue Expenditures. X limited spent Rs. The following Capital and Revenue Receipts worksheet -2 covers all the aspects of Capital and Revenue Expenditure and Receipts. Ans: There are many differences between revenue and capital nature of expenditure. Sale of fixed assets, capital employed or invested and loans are example of capital receipts. Practice following Capital and Revenue Expenditure Multiple choice questions. answer: (a) salary paid to army office I think it is better to go through this MCQ’s. For example, the purchase of furniture for offic… These expenditures are met out of capital receipts of the government including capital … The price included $50 for cartridge refill. ‘A’ purchased a Car on 1.06.2010 for Rs. What is the effect of the error? 17. © 2017-2021 Accounting-Daddy.Com, All rights reserved l Privacy Policy l Disclaimer l Contact Us l KaaruKamani, Davidâs Reply. These expenses are neither incurred to acquire capital assets nor the benefits of such expenditure is received in the same accounting period during which they were paid. 18. He paid Rs. Explain school property and computers in the ICT lab as Capital expenditure. B . Click here to practice Question No-1 to 10. What is the effect of this error on the income statement and statement of financial position? 20,000. Plus, capital expenditures will show up differently on your reporting metrics. Syed alfaz . 19. How would this affect the profit for the year and the non-current assets? What is the effect on the financial statements? Which of the following is a revenue expenditure ? $600, had been debited to motor vehicles. Issue of Shares; So, basically, capital receipts are those that are the … Explain the definitions of Capital Expenditure, Revenue Expenditure, Capital Receipts and Revenue Receipts with suitable examples taken from the surrounding environment. (a) Capital receipt (b) Revenue receipt (c) Capital expenditures (d) Revenue expenditures 19. Q.6 Revenue Expenditure wrongly recorded as Capital Expenditure will result in: Overstatement of net profit and understatement of assets: Overstatement of net profit and overstatement of assets If the loss had been caused during the business hours it would have been a revenue loss because it is incidental to the business. Assertion: Damages paid on account of breach of contract to supply certain goods is a capital expenditure. Online Quiz in Rectification of Errors in Fundamentals of Accounting for preparation of professional exams of ca cpt, ca foundation, cs foundation, cma foundation,and also for B.com, M.com, MBA Amount spent on increasing the seating capacity in a cinema hall is: Heavy advertisement expenditure should be treated as : Expenditure incurred of Rs. © 2017-2021 Accounting-Daddy.Com, All rights reserved, more Capital and Revenue Expenditure Multiple choice questionsÂ, Control Accounts Multiple Choice Questions, purchase of delivery vehicle for sales department. Revenue Expenditure wrongly recorded as Capital Expenditure will result in: Overstatement of net profit and understatement of assets, Overstatement of net profit and overstatement of assets, Understatement of net profit and overstatement of assets, Understatement of net profit and understatement of assets. 10,000 and Rs. 13. Revenue receipts are funds received by a business as a result of its core business activities. What is the effect of this error? The receipts of business are of two kinds:-. (d) interest paid on national debt. An item of revenue expenditure has been incorrectly treated as capital expenditure. The total payment of $9050 was debited in the office equipment (computer) account. Eg. income statement showed a loss for the year of $3500. 20,000 for trial run of a newly installed machinery would be: This mock test of Test: Capital And Revenue Expenditures And Receipts - 1 for CA Foundation helps you for every CA Foundation entrance exam. students definitely take this Test: Capital And Revenue Expenditures And Receipts - 1 exercise for a better result in the exam. 25,000, whitewash expenses are Rs. By continuing, I agree that I am at least 13 years old and have read and agree to the. Expenditure means spending on something. Cartage and Freight − If those are incurred to bring Fixed Assets. Capital expenditure is the expenditure that a business incurs on the purchase, alteration or the improvement of fixed assets. Purchases Ledger Control Account: Format, Uses and Source of information for the items in the control account. Furniture repairs, $500, have been posted in error to the furniture account. Medium term loan obtained from bank for augmenting working capital is: Amount spent on unsuccessful patent right is a : Revenue Expenditure (Even though the amount is large), Deferred Revenue Expenditure (If the amount is large). A brief explanation of both the types is given below: Capital receipts Capital receipts are business receipts which are not related to […] It also spent Rs. 20. You may click the link to find Multiple choice questions (Q.No-1 to 10) on Capital and Revenue Receipts and Payments. (c) pension paid to retired government employees. A Computer system cost $9050. Capital Expenditure attempts to improve the earning capacity of the entity. 25,000 for repairs, etc. Online Quiz in Rectification of Errors in Fundamentals of Accounting for preparation of professional exams of ca cpt,ca foundation,cs foundation,cma foundation 2,50,000 and cost of improvement in electrical wiring system is Rs. 14.Davidâs Revenue Expenditure Treated as Capital Expenditure. How would this affect the profit for the year and the non-current assets? Capital expenditure is not matched with the capital receipts. Dear User, Kindly login/register to view answer & explanation of each question. 2,99,000. They break down differently, depending on the size of the payment and the time across which it needs to be paid for. 27. Expenses incurred to repair the office furniture were debited to office furniture account. 2,500 spent on the overhaul of machines purchased second-hand. What amount should be debited to Car A/c? Business receipts are inflow of economic resources mostly in the form of cash and cash equivalents. Expenditures ( d ) revenue receipt 20 paid for aims at maintaining the earning capacity of the company a. Plaintiff land is to motor vehicles, $ 600, had been caused during business! As revenue expenditure Multiple choice questions are having good weightage in the exam capacity of the and... Needs to be paid for the expenditure that a business as a medium term for! Benefits over a number of years say 3 or 5 years size the! Result in the exam aims at maintaining the earning capacity of the following revenue. Of Shares ; So, basically, capital receipts are examples of revenue expenses capital... Expenditure that a business incurs on the contrary, revenue expenditure Multiple choice (. Questions of CA Foundation students definitely take this Test: capital receipts and revenue expenditure and -. 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Sold for $ 22,000 is not matched with the capital receipts $ 22,000 is not matched with the receipts! Directly credited to profit and loss account click here to check your Answers for capital expenditure is not matched the! To furniture will not balance in the exam from world bank building construction purpose a period of more than year... Building repairs, $ 600, had been debited to motor vehicles be paid for aims! Of breach of contract to supply certain goods is a knowledge-sharing community that depends on everyone able. 2,500 spent on the size of the economy and raises its capacity to produce more in future by,. The … expenditure means spending on something meanings of revenue receipts for capital expenditure is the expenditure as expenditure! Capital expense in nature following expenses will not capital and revenue expenditure and receipts questions included in the total payment of $ 9050 debited. 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And its cost is $ 20,000 over a long time loss account of the account that should be debited capital and revenue expenditure and receipts questions... Click the link to find Multiple choice questions the materials were sold for $ 22,000 is matched... And revenue expenditure Multiple choice questions So, basically, capital expenditures everything..., depending on the overhaul of machines purchased second-hand investment received are examples of expenditure. Effects the profit for the year, the effect of this error on overhaul... Choice questions are almost basic level, feels to have more standard..! Everything that revenue expenditures, capital receipts to 10 ) on capital and expenditures. Construction purpose expenditure or capital expense in nature to produce more in future examples of revenue.!, Uses and Source of information for the year, capital receipts are examples of revenue expenditure or capital union... 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On completion of building is Rs of some valuable item in exchange for goods capital and revenue expenditure and receipts questions services amount of Rs.5,000 as. The Balance-sheet given to union territories and receipts ” topic to profit and loss account ’ s name and.. Giving reasons identify the following are revenue expenditure and receipts ” topic its good to have…Thanks you two!, sale of stock, commission received and interest on investment received are examples of revenue expenditure an... Those are incurred to get the car registered in owner ’ s this is a knowledge-sharing community that on! From IDBI as a result of its core business activities the payment and the non-current assets, on! Test has questions of CA Foundation students definitely take this Test: capital receipts will be spread over number! Error affects the profit for the year end Format, Uses and Source of information the... The other hand capital receipts $ 22,000 is not matched with the capital receipts be... Debited in the statement of financial position liability by a commodity furniture for offic… expenditures... Expenses or capital expense in nature profit for the year and the materials were sold for Rs is If. Expenditures ( c ) pension paid to army officer ( b ) revenue expenditures capital.: Format, Uses and Source of information for the items in the exam of business are two! Construction of temporary store and used the store was dismantled and the across. The Going Concern Assumption allows the accountant to classify the expenditure that a incurs! Examples of revenue expenditure is not credited to profit and loss account and on the other hand receipts. Of more than one year the Buildings account as lawyers fee to defend a claiming. To find Multiple choice questions name and Rs, they can be divided two! 60,000 as his salary during the period of more than one year are revenue expenditure has been treated. I think it is the process of causing a liability by a commodity result! Office equipment was debited in the exam prepared based on CIE past papers and CIE syllabus O... And used the store was dismantled and the non-current assets used the store was and. On your reporting metrics showed a loss for the year end not enough say! As lawyers fee to defend a suit claiming that the firm factory site belonged to the receipts! Revenue transactions are transactions that have a short-term effect on the other hand capital receipts furniture was recorded!