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Unit 4: Capital and Revenue Items
4.4 Self Assessment Notes
Fill in the blanks:
1. Purchase of furniture is a .......................... expenditure.
2. The benefits of ............................... expenditures are generally availed in several accounting
years.
3. An expenditure incurred in the course of regular business transactions of a concern is
availed during the same accounting year is known as ............................. Expenditure.
4. Expenditure incurred on research and development are ......................................
5. The receipts which do not arise out of normal course of business are known as ....................
.................................
6. The receipts which arise out of normal course of a business are known as .............................
................................
State whether the following statements are true or false:
7. Dividend received from shares is capital receipt.
8. Loans are the part of capital receipt
9. Revenue expenditure benefit is only for one accounting year.
10. Depreciation on fixed assets is capital expenditure.
4.5 Review Questions
1. Define capital and revenue expenditure with some suitable examples.
2. State the difference between capital and revenue receipts. Give some examples.
3. Categorise the following items in capital and revenue items:
(a) Rent, rates and taxes
(b) Stationery and printing
(c) Postage and Telegrams
(d) Entertainment
(e) Repairs and renewals
(f) Depreciation on fi xed assets
(g) Offi ce expenses
(h) Bank charges
(i) General expenses
(j) Travelling expenses
4. “There are certain revenue expenditures that are incurred during one accounting year but
are applicable wholly or in part in future periods.” Discuss.
5. State the difference between capital and revenue expenditures.
6. Why furniture expenses are termed as capital expenditure? Give some examples to support
the above statement.
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