CA Foundation Exam > CA Foundation Questions > Rs. 2,500 spent on the overhaul of machines p...
Start Learning for Free
Rs. 2,500 spent on the overhaul of machines purchased second-hand is
- a)Capital expenditure
- b)Revenue expenditure
- c)Deferred revenue expenditure
- d)None of the above
Correct answer is option 'A'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Most Upvoted Answer
Rs. 2,500 spent on the overhaul of machines purchased second-hand isa)...
Explanation:
In this case, the amount spent on the overhaul of machines is a capital expenditure because it has been incurred to improve the machines, which are fixed assets. The machines have been purchased second-hand, and the overhaul is necessary to make them usable. The amount spent is of a large amount and is non-recurring in nature. Therefore, it is a capital expenditure, which is recorded in the balance sheet and depreciated over its useful life.
- Capital expenditure: It is an expenditure incurred to acquire or improve a fixed asset. Fixed assets are long-term assets that are not meant for resale, such as land, buildings, machinery, etc. Capital expenditure is usually of a large amount and is non-recurring in nature. It is recorded in the balance sheet and depreciated over its useful life.
- Revenue expenditure: It is an expenditure incurred in the normal course of business, which is essential to maintain the revenue-generating capacity of the business. Revenue expenditure is recurring in nature and is recorded in the income statement. Examples of revenue expenditure include salaries, rent, repairs, etc.
- Deferred revenue expenditure: It is an expenditure that is incurred in the current accounting period but its benefits are expected to accrue over a number of future accounting periods. Deferred revenue expenditure is usually of a large amount and is recorded as an asset in the balance sheet and is written off over its useful life.
In this case, the amount spent on the overhaul of machines is a capital expenditure because it has been incurred to improve the machines, which are fixed assets. The machines have been purchased second-hand, and the overhaul is necessary to make them usable. The amount spent is of a large amount and is non-recurring in nature. Therefore, it is a capital expenditure, which is recorded in the balance sheet and depreciated over its useful life.
Attention CA Foundation Students!
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.
|
Explore Courses for CA Foundation exam
|
|
Top Courses for CA FoundationView all
Rs. 2,500 spent on the overhaul of machines purchased second-hand isa)Capital expenditureb)Revenue expenditurec)Deferred revenue expenditured)None of the aboveCorrect answer is option 'A'. Can you explain this answer?
Question Description
Rs. 2,500 spent on the overhaul of machines purchased second-hand isa)Capital expenditureb)Revenue expenditurec)Deferred revenue expenditured)None of the aboveCorrect answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Rs. 2,500 spent on the overhaul of machines purchased second-hand isa)Capital expenditureb)Revenue expenditurec)Deferred revenue expenditured)None of the aboveCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Rs. 2,500 spent on the overhaul of machines purchased second-hand isa)Capital expenditureb)Revenue expenditurec)Deferred revenue expenditured)None of the aboveCorrect answer is option 'A'. Can you explain this answer?.
Rs. 2,500 spent on the overhaul of machines purchased second-hand isa)Capital expenditureb)Revenue expenditurec)Deferred revenue expenditured)None of the aboveCorrect answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Rs. 2,500 spent on the overhaul of machines purchased second-hand isa)Capital expenditureb)Revenue expenditurec)Deferred revenue expenditured)None of the aboveCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Rs. 2,500 spent on the overhaul of machines purchased second-hand isa)Capital expenditureb)Revenue expenditurec)Deferred revenue expenditured)None of the aboveCorrect answer is option 'A'. Can you explain this answer?.
Solutions for Rs. 2,500 spent on the overhaul of machines purchased second-hand isa)Capital expenditureb)Revenue expenditurec)Deferred revenue expenditured)None of the aboveCorrect answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of Rs. 2,500 spent on the overhaul of machines purchased second-hand isa)Capital expenditureb)Revenue expenditurec)Deferred revenue expenditured)None of the aboveCorrect answer is option 'A'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Rs. 2,500 spent on the overhaul of machines purchased second-hand isa)Capital expenditureb)Revenue expenditurec)Deferred revenue expenditured)None of the aboveCorrect answer is option 'A'. Can you explain this answer?, a detailed solution for Rs. 2,500 spent on the overhaul of machines purchased second-hand isa)Capital expenditureb)Revenue expenditurec)Deferred revenue expenditured)None of the aboveCorrect answer is option 'A'. Can you explain this answer? has been provided alongside types of Rs. 2,500 spent on the overhaul of machines purchased second-hand isa)Capital expenditureb)Revenue expenditurec)Deferred revenue expenditured)None of the aboveCorrect answer is option 'A'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Rs. 2,500 spent on the overhaul of machines purchased second-hand isa)Capital expenditureb)Revenue expenditurec)Deferred revenue expenditured)None of the aboveCorrect answer is option 'A'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
|
|
Explore Courses for CA Foundation exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup