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?
Explanation:
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.
Under single entry, closing capital is ₹2,00,000; opening capital ₹1,50,000; drawings ₹20,000; additional capital ₹10,000. Profit for the year is:
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