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Which of the following are an example of Revenue Expenditure
(a) Preliminary expenses for floating a company
(b) Renewal expenses/fee of patent.
(c) Depreciation on fixed assets.
(d) Repair of machinery normal or due to negligence of operator
(e) Expenses for obtaining a license.
Options are as follows
(a) Preliminary expenses for floating a company
(b) Renewal expenses/fee of patent.
(c) Depreciation on fixed assets.
(d) Repair of machinery normal or due to negligence of operator
(e) Expenses for obtaining a license.
Options are as follows
- a)a,b,c,d,
- b)b,c,d
- c)c,d,e
- d)a,b,c,d,e,
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Which of the following are an example of Revenue Expenditure(a) Prelim...
Because revenue expenditure neither decrease any liability nor creates an asset and option B is suitable for revenue expenditure
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Which of the following are an example of Revenue Expenditure(a) Prelim...
Revenue Expenditure:
Revenue expenditure refers to the expenses incurred by a company in its day-to-day operations to generate revenue. These expenses are typically recurring in nature and are recorded in the income statement as an expense in the period they are incurred.
Examples of Revenue Expenditure:
The examples of revenue expenditure are as follows:
(b) Renewal expenses/fee of patent:
The renewal expenses or fees incurred to renew a patent are considered revenue expenditures. These expenses are necessary to maintain the patent rights and enable the company to continue generating revenue from the patented product or process.
(c) Depreciation on fixed assets:
Depreciation is the systematic allocation of the cost of a fixed asset over its useful life. It is considered a revenue expenditure because it represents the ongoing expense of using the fixed asset to generate revenue. Depreciation is recorded as an expense in the income statement, reducing the company's net income.
(d) Repair of machinery normal or due to negligence of operator:
The repair expenses incurred for machinery, whether it is for normal wear and tear or due to negligence of the operator, are considered revenue expenditures. These expenses are necessary to maintain the machinery in working condition and ensure its continued use in revenue generation.
Explanation of the Correct Answer:
The correct answer is option 'B' (b,c,d). This is because the examples mentioned in options (b), (c), and (d) are all revenue expenditures. They are recurring expenses incurred in the day-to-day operations of a company to generate revenue. These expenses are deducted from the company's revenue in the income statement to calculate the net income. Option (a) is incorrect because preliminary expenses for floating a company are considered capital expenditures, not revenue expenditures. Option (e) is incorrect because expenses for obtaining a license are also considered capital expenditures, as they provide long-term benefits to the company.
Revenue expenditure refers to the expenses incurred by a company in its day-to-day operations to generate revenue. These expenses are typically recurring in nature and are recorded in the income statement as an expense in the period they are incurred.
Examples of Revenue Expenditure:
The examples of revenue expenditure are as follows:
(b) Renewal expenses/fee of patent:
The renewal expenses or fees incurred to renew a patent are considered revenue expenditures. These expenses are necessary to maintain the patent rights and enable the company to continue generating revenue from the patented product or process.
(c) Depreciation on fixed assets:
Depreciation is the systematic allocation of the cost of a fixed asset over its useful life. It is considered a revenue expenditure because it represents the ongoing expense of using the fixed asset to generate revenue. Depreciation is recorded as an expense in the income statement, reducing the company's net income.
(d) Repair of machinery normal or due to negligence of operator:
The repair expenses incurred for machinery, whether it is for normal wear and tear or due to negligence of the operator, are considered revenue expenditures. These expenses are necessary to maintain the machinery in working condition and ensure its continued use in revenue generation.
Explanation of the Correct Answer:
The correct answer is option 'B' (b,c,d). This is because the examples mentioned in options (b), (c), and (d) are all revenue expenditures. They are recurring expenses incurred in the day-to-day operations of a company to generate revenue. These expenses are deducted from the company's revenue in the income statement to calculate the net income. Option (a) is incorrect because preliminary expenses for floating a company are considered capital expenditures, not revenue expenditures. Option (e) is incorrect because expenses for obtaining a license are also considered capital expenditures, as they provide long-term benefits to the company.
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