Can you explain the answer of this question below:Expenditure on purchase of machinery is aA:Revenue expenditureB:Deferred revenue expenditureC:Capital expenditureD:None of theseThe answer is C.

Question

Answer

Option C, capital expenditure

Answer

Expenditure on purchase of machinery is a capital expenditure .... it is capital expenditure because it is an acquisition of fixed assets ... it exist for long period and gives benefit for long time....

Answer

What is expenditure and why the answer is capital expenditure

Answer

Because expenditure on purchased machinery is expenses and we pay expenses with cash and cash is our capital

Answer

Capital expenditure

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The answer is c(capital expenditure)because we purchase the machine only one time for the use.

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The answer is C

Answer

Answer is C.

Answer

Expenditure on purchase of machinery is a: Capital expenditure

Explanation:

1. Introduction:
Expenditure refers to the amount of money spent on various activities or items. In the context of accounting, expenditures are categorized into different types based on their nature and purpose. One such categorization is between revenue expenditure and capital expenditure.

2. Revenue Expenditure:
Revenue expenditure refers to the expenses incurred in the day-to-day operations of a business that are essential for generating revenue. These expenses are typically short-term in nature and are incurred within an accounting period. Examples of revenue expenditure include salaries, rent, utilities, advertising expenses, and repairs. Revenue expenditures are recorded in the income statement and are deducted from the revenue earned to calculate the net income.

3. Capital Expenditure:
Capital expenditure, on the other hand, refers to the expenses incurred for acquiring or improving long-term assets that are used in the business to generate revenue over an extended period of time. These assets are known as fixed assets or capital assets. Machinery, buildings, vehicles, land, and equipment are some examples of capital assets. Capital expenditures are recorded in the balance sheet and are not fully deducted in the year they are incurred. Instead, they are capitalized and their costs are allocated over their useful lives through depreciation.

4. Expenditure on Purchase of Machinery:
The expenditure on the purchase of machinery falls under the category of capital expenditure. Machinery is a long-term asset that is used in the production process and contributes to the generation of revenue over a period of time. It is not consumed or used up immediately, but provides benefits over multiple accounting periods. Therefore, the cost of purchasing machinery is considered a capital expenditure and is capitalized on the balance sheet. The cost is then allocated over the useful life of the machinery through depreciation expenses.

5. Conclusion:
In summary, the expenditure on the purchase of machinery is classified as a capital expenditure. It is important to correctly categorize expenditures as either revenue or capital to ensure accurate financial reporting and to determine the appropriate treatment for tax purposes.

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