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Classify the following expenditures and receipts as capital or revenue: (i) 10,000 spent as travelling expenses of the directors on trips abroad for purchase of capital assets. (ii) Amount received from Trade receivables during the year. (iii) Amount spent on demolition of building to construct a bigger building on the same site. (iv )Insurance claim received on account of a machinery damaged by fire.?
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Classify the following expenditures and receipts as capital or revenue...
Classification of Expenditures and Receipts as Capital or Revenue
(i) Travelling expenses of the directors on trips abroad for purchase of capital assets - Capital Expenditure
(ii) Amount received from Trade receivables during the year - Revenue Receipt
(iii) Amount spent on demolition of building to construct a bigger building on the same site - Capital Expenditure
(iv) Insurance claim received on account of a machinery damaged by fire - Revenue Receipt
Explanation:
Capital Expenditure:
Capital expenditure refers to the expenses incurred for acquiring, improving, or maintaining fixed assets that are expected to provide benefits to the company over a long period. These expenditures are not meant for immediate consumption or sale, but for generating income in the future.
Revenue Receipt:
Revenue receipts are the receipts that are earned by the company from its normal business operations. These receipts are generated from the sale of goods or services, and they are meant for immediate consumption or sale.
(i) Travelling expenses of the directors on trips abroad for purchase of capital assets - Capital Expenditure:
In this case, the company has incurred expenses on travelling abroad to purchase capital assets. These expenses are considered as capital expenditure because they are incurred for acquiring a long-term asset that will provide benefits to the company for a long period.
(ii) Amount received from Trade receivables during the year - Revenue Receipt:
In this case, the company has received an amount from its trade receivables, which is considered as revenue receipt. The amount is earned from the normal business operations of the company.
(iii) Amount spent on demolition of building to construct a bigger building on the same site - Capital Expenditure:
In this case, the company has incurred expenses on demolishing the existing building to construct a bigger building on the same site. These expenses are considered as capital expenditure because they are incurred for acquiring a long-term asset that will provide benefits to the company for a long period.
(iv) Insurance claim received on account of a machinery damaged by fire - Revenue Receipt:
In this case, the company has received an insurance claim on account of a machinery damaged by fire. This amount is considered as revenue receipt because it is earned from the normal business operations of the company.
(i) Travelling expenses of the directors on trips abroad for purchase of capital assets - Capital Expenditure
(ii) Amount received from Trade receivables during the year - Revenue Receipt
(iii) Amount spent on demolition of building to construct a bigger building on the same site - Capital Expenditure
(iv) Insurance claim received on account of a machinery damaged by fire - Revenue Receipt
Explanation:
Capital Expenditure:
Capital expenditure refers to the expenses incurred for acquiring, improving, or maintaining fixed assets that are expected to provide benefits to the company over a long period. These expenditures are not meant for immediate consumption or sale, but for generating income in the future.
Revenue Receipt:
Revenue receipts are the receipts that are earned by the company from its normal business operations. These receipts are generated from the sale of goods or services, and they are meant for immediate consumption or sale.
(i) Travelling expenses of the directors on trips abroad for purchase of capital assets - Capital Expenditure:
In this case, the company has incurred expenses on travelling abroad to purchase capital assets. These expenses are considered as capital expenditure because they are incurred for acquiring a long-term asset that will provide benefits to the company for a long period.
(ii) Amount received from Trade receivables during the year - Revenue Receipt:
In this case, the company has received an amount from its trade receivables, which is considered as revenue receipt. The amount is earned from the normal business operations of the company.
(iii) Amount spent on demolition of building to construct a bigger building on the same site - Capital Expenditure:
In this case, the company has incurred expenses on demolishing the existing building to construct a bigger building on the same site. These expenses are considered as capital expenditure because they are incurred for acquiring a long-term asset that will provide benefits to the company for a long period.
(iv) Insurance claim received on account of a machinery damaged by fire - Revenue Receipt:
In this case, the company has received an insurance claim on account of a machinery damaged by fire. This amount is considered as revenue receipt because it is earned from the normal business operations of the company.
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Classify the following expenditures and receipts as capital or revenue: (i) 10,000 spent as travelling expenses of the directors on trips abroad for purchase of capital assets. (ii) Amount received from Trade receivables during the year. (iii) Amount spent on demolition of building to construct a bigger building on the same site. (iv )Insurance claim received on account of a machinery damaged by fire.?
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Classify the following expenditures and receipts as capital or revenue: (i) 10,000 spent as travelling expenses of the directors on trips abroad for purchase of capital assets. (ii) Amount received from Trade receivables during the year. (iii) Amount spent on demolition of building to construct a bigger building on the same site. (iv )Insurance claim received on account of a machinery damaged by fire.? 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 Classify the following expenditures and receipts as capital or revenue: (i) 10,000 spent as travelling expenses of the directors on trips abroad for purchase of capital assets. (ii) Amount received from Trade receivables during the year. (iii) Amount spent on demolition of building to construct a bigger building on the same site. (iv )Insurance claim received on account of a machinery damaged by fire.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Classify the following expenditures and receipts as capital or revenue: (i) 10,000 spent as travelling expenses of the directors on trips abroad for purchase of capital assets. (ii) Amount received from Trade receivables during the year. (iii) Amount spent on demolition of building to construct a bigger building on the same site. (iv )Insurance claim received on account of a machinery damaged by fire.?.
Classify the following expenditures and receipts as capital or revenue: (i) 10,000 spent as travelling expenses of the directors on trips abroad for purchase of capital assets. (ii) Amount received from Trade receivables during the year. (iii) Amount spent on demolition of building to construct a bigger building on the same site. (iv )Insurance claim received on account of a machinery damaged by fire.? 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 Classify the following expenditures and receipts as capital or revenue: (i) 10,000 spent as travelling expenses of the directors on trips abroad for purchase of capital assets. (ii) Amount received from Trade receivables during the year. (iii) Amount spent on demolition of building to construct a bigger building on the same site. (iv )Insurance claim received on account of a machinery damaged by fire.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Classify the following expenditures and receipts as capital or revenue: (i) 10,000 spent as travelling expenses of the directors on trips abroad for purchase of capital assets. (ii) Amount received from Trade receivables during the year. (iii) Amount spent on demolition of building to construct a bigger building on the same site. (iv )Insurance claim received on account of a machinery damaged by fire.?.
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