Expenditure incurred on overhauling a second-hand machinery purchased recently to put it in working condition is: MCQ with Answer and Explanation

Expenditure incurred on overhauling a second-hand machinery purchased recently to put it in working condition is:
A. Capital Expenditure
B. Revenue Expenditure
C. Deferred Revenue Expenditure
D. Loss
Answer: Option A
Solution (By JKSSB Mock Tests)
All costs incurred before a fixed asset is ready for its intended use are capitalized.

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Practice More Accountancy and Book Keeping Questions

Question #1
An unearned income (income received in advance) appears in the Balance Sheet as a:
A. Contingent Liability
B. Current Asset
C. Current Liability
D. Non-Current Liability

Correct Answer: Option C


Explanation:
Income received before the service is provided creates an obligation to deliver the service, making it a current liability.

Question #2
S1: The Ledger is the book of original entry. S2: The process of transferring entries from the Journal to the Ledger is called posting. Which statement(s) is/are correct?
A. Neither S1 nor S2
B. Both S1 and S2
C. S2 only
D. S1 only

Correct Answer: Option C


Explanation:
The Journal is the book of original entry, not the Ledger. The Ledger is the principal book of accounts. S2 is correct as posting is the process of transferring journal entries to ledger accounts.

Question #3
A company issued 10,000 shares of ₹10 each at par, payable ₹2 on application, ₹3 on allotment, ₹5 on call. A shareholder holding 500 shares failed to pay call money. Calls-in-arrears amount is:
A. ₹2,500
B. ₹1,000
C. ₹5,000
D. ₹1,500

Correct Answer: Option A


Explanation:
Call money unpaid = 500 shares * ₹5 = ₹2,500.