Which of the following is a revenue expenditure? MCQ with Answer and Explanation

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Which of the following is a revenue expenditure?

A. Annual repairs of machinery

B. Legal expenses to acquire a building

C. Extension of building

D. Purchase of land for factory

Answer: Option A

Solution (By JKSSB Mock Tests)

Annual repairs are recurring and maintain existing asset's earning capacity, hence revenue expenditure. Others are capital expenditures.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

Capital expenditure is recorded in:

A. Trading Account

B. Profit & Loss Account

C. Manufacturing Account

D. Balance Sheet

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Correct Answer: Option D

Explanation:
Capital expenditure results in acquisition of assets, shown on the asset side of Balance Sheet.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

Which of the following is a direct expense?

A. Factory rent

B. Carriage inwards

C. Advertising

D. Office salaries

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Correct Answer: Option B

Explanation:
Carriage inwards is a direct expense because it is directly attributable to the purchase of goods and bringing them to the place of business.

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Question #3

The 'Customs Act, 1962' empowers the Central Government to:

A. Regulate imports and exports and levy customs duties

B. Impose GST

C. Collect income tax

D. Regulate company law

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Correct Answer: Option A

Explanation:
Customs Act governs import and export of goods and levy of customs duties.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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