Advertising campaign to launch a new product.a)Capital expenditureb)Re...
Deferred Revenue Expenditure is an expenditure which is revenue in nature and incurred during an accounting period, but its benefits are to be derived in multiple future accounting periods.
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Advertising campaign to launch a new product.a)Capital expenditureb)Re...
Deferred Revenue Expenditure
The correct answer is option 'C', Deferred Revenue Expenditure. Here's why:
Advertising campaign to launch a new product is an example of a deferred revenue expenditure. It is an expense that is incurred in one accounting period, but the benefits of which are realized over multiple accounting periods. In other words, it is an expenditure that provides long-term benefits to the business.
Below are the explanations of each option:
a) Capital expenditure - This refers to the expenditure incurred for acquiring or improving fixed assets, such as land, building, machinery, etc. Advertising campaign to launch a new product does not fall under this category.
b) Revenue expenditure - This refers to the expenditure incurred for the day-to-day operation of the business, such as salaries, rent, utilities, etc. Advertising campaign to launch a new product is not a regular expense, but rather a one-time expense to promote a new product.
c) Deferred revenue expenditure - This refers to the expenditure incurred in the current accounting period, but the benefits of which are realized over multiple accounting periods. Advertising campaign to launch a new product falls under this category as it provides long-term benefits to the business by promoting the new product and increasing sales.
d) None of the above - None of the above options are correct as advertising campaign to launch a new product is an example of a deferred revenue expenditure.
In conclusion, advertising campaign to launch a new product is an example of a deferred revenue expenditure as it provides long-term benefits to the business by promoting the new product and increasing sales.
Advertising campaign to launch a new product.a)Capital expenditureb)Re...
Deferred revenue expenditure.
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