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Which of the following is of a capital nature?
- a)Purchase of a truck
- b)Cost of repair
- c)Wages paid for installation of machinery
- d)Road tax paid
Correct answer is option 'A,C'. Can you explain this answer?
Verified Answer
Which of the following is of a capital nature?a)Purchase of a truckb)C...
Capital Nature Expenses:
Purchase of a truck:
- Purchasing a truck is considered a capital expense because it is a long-term investment in the business.
- The truck is an asset that will be used for a significant period of time to generate revenue for the business.
Wages paid for installation of machinery:
- The wages paid for the installation of machinery are considered a capital expense.
- The installation of machinery is a one-time investment that will benefit the business in the long run.
Non-Capital Nature Expenses:
Cost of repair:
- The cost of repair is not a capital expense.
- Repairs are considered regular maintenance expenses that are necessary to keep the assets in working condition.
Road tax paid:
- Road tax is not a capital expense.
- It is a recurring expense that is required to be paid annually for the use of vehicles on public roads.
In summary, the expenses that are of a capital nature are the purchase of a truck and the wages paid for the installation of machinery. These expenses are considered long-term investments in the business and are expected to generate benefits over an extended period of time. On the other hand, the cost of repair and road tax paid are considered regular expenses that are necessary for the day-to-day operations of the business.
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Purchase of a truck:
- Purchasing a truck is considered a capital expense because it is a long-term investment in the business.
- The truck is an asset that will be used for a significant period of time to generate revenue for the business.
Wages paid for installation of machinery:
- The wages paid for the installation of machinery are considered a capital expense.
- The installation of machinery is a one-time investment that will benefit the business in the long run.
Non-Capital Nature Expenses:
Cost of repair:
- The cost of repair is not a capital expense.
- Repairs are considered regular maintenance expenses that are necessary to keep the assets in working condition.
Road tax paid:
- Road tax is not a capital expense.
- It is a recurring expense that is required to be paid annually for the use of vehicles on public roads.
In summary, the expenses that are of a capital nature are the purchase of a truck and the wages paid for the installation of machinery. These expenses are considered long-term investments in the business and are expected to generate benefits over an extended period of time. On the other hand, the cost of repair and road tax paid are considered regular expenses that are necessary for the day-to-day operations of the business.
Most Upvoted Answer
Which of the following is of a capital nature?a)Purchase of a truckb)C...
Explanation:
Capital Nature Expenses:
- Purchase of a truck: Buying a truck is a capital expenditure as it is a long-term asset that will be used in the business for a considerable period.
- Wages paid for installation of machinery: The cost of installing machinery is considered a capital expense as it enhances the value of the machinery and allows it to be used effectively.
Revenue Nature Expenses:
- Cost of repair: Repair costs are considered revenue expenditures as they are incurred to maintain the existing assets in good working condition.
- Road tax paid: Road tax is a recurring expense that is considered revenue in nature as it is paid for the ongoing use of the vehicle on public roads.
In this scenario, the purchase of a truck and wages paid for the installation of machinery are of a capital nature as they are related to acquiring or improving long-term assets that will benefit the business over an extended period. On the other hand, repair costs and road tax are revenue expenses as they are associated with maintaining and using existing assets in the short term.
Capital Nature Expenses:
- Purchase of a truck: Buying a truck is a capital expenditure as it is a long-term asset that will be used in the business for a considerable period.
- Wages paid for installation of machinery: The cost of installing machinery is considered a capital expense as it enhances the value of the machinery and allows it to be used effectively.
Revenue Nature Expenses:
- Cost of repair: Repair costs are considered revenue expenditures as they are incurred to maintain the existing assets in good working condition.
- Road tax paid: Road tax is a recurring expense that is considered revenue in nature as it is paid for the ongoing use of the vehicle on public roads.
In this scenario, the purchase of a truck and wages paid for the installation of machinery are of a capital nature as they are related to acquiring or improving long-term assets that will benefit the business over an extended period. On the other hand, repair costs and road tax are revenue expenses as they are associated with maintaining and using existing assets in the short term.
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Community Answer
Which of the following is of a capital nature?a)Purchase of a truckb)C...
Wages paid for installation of machinery is capital expenditure as it is non recurring in nature. so we add it to machinery as we can't use machinery without installation .
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Which of the following is of a capital nature?a)Purchase of a truckb)Cost of repairc)Wages paid for installation of machineryd)Road tax paidCorrect answer is option 'A,C'. Can you explain this answer?
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