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MUl,JlPLE CHOI.CE ·QUESTIONS

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EXERCISES
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5. This expenditure relates to normal functioning of the government departments and provision of various
governme~
gra~
rvlces. The main examples of such expenditures are salaries, pensions, Interest. subs1dles,
e state governments, etc.
· . g expen 1ture
1. Leg~l..expenses Incurred to purchase land are (8) Recurnn ·~1 Revenue expenditure (Bl Capita! expenditure (C) Regular expenditure (DJ None of these
•· of these Capital receipts are usually obtained In case of a company:
(A) Capital expenditures (D) None
(0 Revenue expenditures •• (Al From Issue of shares. debentures (Bl B
2. Which of the following is a capital transaction? ( ) p~nt of wages. (CJ Sale of fixed assets or Investments ~ I of the above
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(A) Purchase of goods ,(D) purchase of mac mery 17. Purchased a computer for office Is which .type of expendltur____-
(C) Sale of goods l' (Al Revenue expenditure
(C) Deferr.ed revenue expenditure
. ~ ~ pital expenditure
(D) Regular expenditure
3. Expendlture~!!Jcur.red to acquire fixed assets are cal ed ( ) Prepaid expenses
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(A) Re~AUe expenditures (D) outstanding expenses 18. A receipt Is a capital receipt:
JO-<apltal expenditures (A) if It satisfies any one of the two conditions: The receipts must create a liability for the government. The
recel~ must cause a decrease In the assets.
4 . An e dlture Is Revenue_expenditure If ) it either affects liabilities or. assets
8 (BJ ~wings are capital receipts as they lead to an increase in the liability of the government.
) A t neither affects llablllt,es nor assets ( None of these
Both (A) and (B) .
L-- (CJ Either (Al. or (8) (D)
(DJ None of these
5. Ca~~ ndlture is incurred for (8) Day-to-day conduct of business 19. An expenditure is Deferred revenue expenditure because
Acquisition of fixed assets
(D) All of these (Al ~ t spent to buy assets
(CJ Malnta!!)lrlg-the existing earning capacity
~ T h e benefit of such expenditure is enjoyed by the business over a number of years.
6. Mo!)_ey-'l'eZeived by sale of machine is a (C) Amount spends in investment
c..,,.--1-'f ' Capital
receipt (8) Revenue receipt
(D) ,None of the above
(0 Deferred revenue receipt (D) None of these
20. Which of the following type of expenses are included in Revenue expenditure?
7. Revenueypenditure is incurred:
(8) To maintain the efficiency of an asset (A) Depreciation on fixed assets
(AJ J.o-improve the efficiency of an asset
To buy a fixed asset (D) It involves withdrawal of capital r , (B) Expenses incurred for day to day running of business
(CJ L..oss'from sale of fixed assets
8. An expenditure is a capital expenditure when: 1 ~ I I of the above
(Al It relates to sale fixed assets c ) E l ' ~s du~ to abno rmal reasons
(D) It relates to maintain the efficiency of 21. Expenses incurred to repair a seco~. d machine, purchase by the firm, to make it usable are treated
(0 It involves withdrawal of capital an as~ under which expenditure?
9. Period/ of benefit of capital expenditure is. (A) Revenue (C) Deferred revenue (D) Capital loss
U Af Only to the current accounting year ' (B) More t han one year
22. Which of the fo lowing type of expenses are included in capital expenditure?
(0 One month
,,.. / (D) One we~k
(A) Depreci · n on fixed assets
10. Premrum received on issue of shares is a (8) nses incurred for day-to-day running of business
..,,-<;i() Capital receipt (BJ Revenue rec~ipt Sale of fixed assets
· (0 Deferred revenue receipt (DJ' None of these (D) Raw material and stores
11 . fixed assets"l~se part of their value every year due to w~ar ~nd tea'r with pa~~age of time, such reduction 23. Match the Column I and Column II :
is calfe°d ______ on fixed assets.
Column - I Column' - II
,(,'(J depreciati~ (BJ deduction (C) production (D) none of these (a) Capital Expenditure i Repairs costing ,Goo carried out on a boiler
12. Fees and , commission received for services rendered, interest and dividend received an investment are (b) Revenue Expenditure ii Advertising expenses '25,000 incurred for launching a new
~~~,'.!)pies of product in the market.
~evenue receipts (B) capital receipts (cJ Defer.red Revenue Expenditure iii Interest received.
(0 Deferred revenue expenditure (DJ None of these (d) Revenue Receipts iv A sum of ,, 5,000 spent on the overhauling of a second-hand
13 Carriage, freight, octroi duty, customs duty, clearing charg!ls, dock dues, and excise duty paid on machinery delivery van.
are~pies of: (A) (a) i (b) ii (C) iii (dJ Iv (bJ Ii (C) Iv (d) i
(C) (a) i (bJ iii (CJ iv (d)li (bl I (C) ii (d) iii
.. _..-t,ilf Capital expenditure
I':'."-----...... (B) Capital
___ _,__ ,. loss (CZJ Revenue expenditure (DJ Revenue loss
currea to acquire nxea assets are called:· 24. Match the Column I and Column II:
ue expenditure Column - I Column - II
(B) Outstanding expenditure
pita! expenditure (a) Preliminary expenses of ,s,ooo Capital Expenditure
) 74 (D) Prepaid expenses
(bl Purchase of old machine for , 9,500. Ii Revenue Expenditure
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