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Money spent Rs. 10,000 as traveling expenses of the directors on trips abroad for purchase of capital assets is 
  • a)
    Capital expenditures 
  • b)
    Revenue expenditures 
  • c)
    Deferred revenue expenditures 
  • d)
    None of the above 
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
Money spent Rs. 10,000 as traveling expenses of the directors on trips...
Capital expenditures are the expenses incurred to acquire or improve a long-term asset such as property, plant, and equipment. In this case, the money spent on traveling expenses of the directors for trips abroad to purchase capital assets qualifies as capital expenditures.

Reasons why the given expense is classified as capital expenditure:

1. Acquiring long-term assets: The expense is incurred for purchasing capital assets, which are long-term assets that are expected to provide benefits to the company for a period of more than one year.

2. Enhancing the asset's value: The expense incurred on traveling is directly related to the purchase of capital assets, which will enhance the value of the company's assets.

3. Future economic benefits: The purchase of capital assets will provide future economic benefits to the company.

4. Non-recurring: Such expenses are non-recurring in nature and are not incurred on a regular basis.

Therefore, the money spent on traveling expenses of the directors on trips abroad for the purchase of capital assets is classified as a capital expenditure.
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Community Answer
Money spent Rs. 10,000 as traveling expenses of the directors on trips...
Since its related to purchase of capital
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Money spent Rs. 10,000 as traveling expenses of the directors on trips abroad for purchase of capital assets isa)Capital expendituresb)Revenue expendituresc)Deferred revenue expendituresd)None of the aboveCorrect answer is option 'A'. Can you explain this answer?
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