S1: Capital expenditure increases the earning capacity of the business. S2: Revenue expenditure maintains the earning capacity of the business. Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: Capital expenditure increases the earning capacity of the business. S2: Revenue expenditure maintains the earning capacity of the business. Which statement(s) is/are correct?
A. Neither S1 nor S2
B. S2 only
C. Both S1 and S2
D. S1 only
Answer: Option C
Solution (By JKSSB Mock Tests)
Capital expenditure is incurred to acquire or improve assets, thereby increasing earning capacity. Revenue expenditure is incurred for day-to-day operations to maintain the existing earning capacity. Both statements are correct.
S1: In the absence of a partnership deed, a partner is entitled to a salary for participating in management. S2: In the absence of a partnership deed, interest on partner's loan is allowed at 6% p.a. Which statement(s) is/are correct?
Explanation:
The Partnership Act 1932 does not allow any partner to claim a salary for management participation if the deed is silent. However, it does allow interest on a partner's loan at 6% p.a. S1 is incorrect, S2 is correct.
Explanation:
An individual's residential status for tax purposes is determined by their period of stay in India during the relevant financial year, irrespective of citizenship.
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