Test: Capital And Revenue Expenditures And Receipts - 2


30 Questions MCQ Test Accountancy Class 11 | Test: Capital And Revenue Expenditures And Receipts - 2


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This mock test of Test: Capital And Revenue Expenditures And Receipts - 2 for CA Foundation helps you for every CA Foundation entrance exam. This contains 30 Multiple Choice Questions for CA Foundation Test: Capital And Revenue Expenditures And Receipts - 2 (mcq) to study with solutions a complete question bank. The solved questions answers in this Test: Capital And Revenue Expenditures And Receipts - 2 quiz give you a good mix of easy questions and tough questions. CA Foundation students definitely take this Test: Capital And Revenue Expenditures And Receipts - 2 exercise for a better result in the exam. You can find other Test: Capital And Revenue Expenditures And Receipts - 2 extra questions, long questions & short questions for CA Foundation on EduRev as well by searching above.
QUESTION: 1

Rs. 1,200 spent on the repairs of machine. 

Solution:

The correct option is B.

A revenue expenditure is a cost that will be an expense in the accounting period when the expenditure takes place, that is, a revenue expenditure is a cost that is charged to expenses as soon as the cost is incurred. Revenue Expenditure is that part of a company's expenditure that does not result in the creation of assets.

QUESTION: 2

XYZ Limited has a house for 3 years. It used it as guest house. Now it incurred an expenditure for Rs. 2,50,000 for repairing the roof of this house. Expenses incurred on such repairs are:-

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QUESTION: 3

 A truck was purchased and after sometime, the name of the company was painted on it for advertisement purpose for Rs. 1,000/- this is:

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QUESTION: 4

 An old machinery is purchased for Rs. 10,000. Installation charges of Rs. 1,000 were incurred. Repairs to the old machinery = Rs. 7,000 Repairs Account will be debited by: 

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QUESTION: 5

Deferred Revenue Expenditure to the extent of not written off, is shown in Balance Sheet under the head:-

Solution:

The correct option is A.

Deferred Revenue expenditure is usually a large amount and its benefits are not consumed within the same accounting period. A part of the amount is shown in the Profit and Loss Account and is deducted from total expenditure and the rest is shown in the Balance Sheet. This expenditure does not result in an asset creation. That's why these are shown under the head miscellaneous expenditure.

QUESTION: 6

Revenue from sale of products, ordinarily, is reported as part of the earning in the period in which

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QUESTION: 7

What is the difference between deferred revenue expenditure and prepaid expenses?

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QUESTION: 8

Money spent Rs. 10,000 as traveling expenses of the directors on trips abroad for purchase of capital assets is 

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QUESTION: 9

 Advertising campaign to launch a new product. 

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QUESTION: 10

 Interest on investments received from UTI is

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QUESTION: 11

A bad debt recovered during the year. 

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QUESTION: 12

 Subsidy of Rs. 40,000 received from the government  for working capital by a manufacturing concern is

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QUESTION: 13

A new machine was purchased in Delhi and brought to Jaipur factory site for installation. The machine was damaged during transit and repair expenses were incurred amounting to Rs. 20,000. Such repair will be treated as:

Solution:

The correct option is B.

A revenue expenditure is a cost that will be an expense in the accounting period when the expenditure takes place, that is, a revenue expenditure is a cost that is charged to expenses as soon as the cost is incurred. Revenue Expenditure is that part of a company's expenditure that does not result in the creation of assets.Since repairs does not create an asset, it is a revenue expenditure. 

QUESTION: 14

 If repairs of Rs. 100 are done on a machinery then which account will be debited?

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QUESTION: 15

White washing expenses. 

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QUESTION: 16

 Amount received from IDBI as a medium term loan for augmenting working capital is

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QUESTION: 17

What is the difference between deferred revenue expenditure and prepaid expenses?

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QUESTION: 18

Shivam purchased an old building for Rs. 50 lakhs. He demolished the building for the purpose of constructing shopping mall on the same site. Demolition cost was. Rs. 1 lakh. Construction cost of the mall was Rs. 35 lakhs. He inaugurated it and the inauguration cost was Rs. 50,000 Capital Expenditure was:

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QUESTION: 19

 Revenue from sale of products, ordinarily, is reported as part of the earning in the period in which

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QUESTION: 20

Rs. 2,500 spent on the overhaul of machines purchased second-hand is

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QUESTION: 21

Subsidy of Rs. 40,000 received from the government  for working capital by a manufacturing concern is

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QUESTION: 22

Deferred Revenue Expenditure to the extent of not written off, is shown in Balance Sheet under the head:-

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QUESTION: 23

 An amount of Rs. 30,000 spent on traveling expenses of the company’s director’s to a foreign trip for purchase of an asset to be used in the production process. This is a:

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QUESTION: 24

Which of the following statement is false?

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QUESTION: 25

 Medium term loan obtained from bank for augmenting working capital is:

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QUESTION: 26

Amount spent on increasing the seating capacity in cinema hall is:-

Solution:

Any amount spent to enhance the capacity of the business and gives the benefit for a long duration are considered as capital expenditure. 

QUESTION: 27

Which of the following Expenses will not be included in the acquisition of plant?

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QUESTION: 28

 X limited spent Rs. 10,00,000 towards construction of office building. It also spent Rs. 50,000 towards construction of temporary store and used the store for building construction purpose. On completion of building construction the store was dismantled and the materials were sold for Rs. 20,000. Mr. A, a supervisor was paid Rs. 60,000 as his salary during the period of construction and he devoted 2/3rd of his time for the building construction. The capitalized cost of office building was:

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QUESTION: 29

 Advertising campaign to launch a new product. 

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QUESTION: 30

Capital Receipts are represented in : 

Solution: