Unit 4: Capital And Revenue Expenditures and Receipts (Summary) CA CPT Notes | EduRev

Principles and Practice of Accounting

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CA CPT : Unit 4: Capital And Revenue Expenditures and Receipts (Summary) CA CPT Notes | EduRev

The document Unit 4: Capital And Revenue Expenditures and Receipts (Summary) CA CPT Notes | EduRev is a part of the CA CPT Course Principles and Practice of Accounting.
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  • Revenue expenditures are shown in the profit and loss account while capital expenditures are placed on the asset side of the balance sheet since they generate benefits for more than are accounting period.
  • Prepaid expenses are future expenses that have been paid in advance. These are shown in the balance sheet as an asset.
  • Receipts obtained should be classified between revenue receipts and capital receipts.

Ques 1: Money spent Rs 10,000 as traveling expenses of the directors on trips abroad for purchase of capital assets is
(a)   Capital expenditures
(b)   Revenue expenditures  

(c)   Prepaid revenue expenditures
Ans:(a)


Ques 2: Amount of Rs 5,000 spent as lawyers’ fee to defend a suit claiming that the firm’s factory site belonged to the plainti’s land is
(a)  Capital expenditures
(b)   Revenue expenditures 

(c)  Prepaid revenue expenditures
Ans : (b)

Ques 3: Entrance fee of Rs 2,000 received by Ram and Shyam Social Club is
(a)  Capital receipt
(b)  Revenue receipt
(c)  Capital expenditures
Ans: (a) 

Ques 4: Subsidy of Rs 40,000 received from the government for working capital by a manufacturing concern is
(a)  Capital receipt
(b)  Revenue receipt
(c)  Capital expenditures
Ans: (b)

Ques 5: Insurance claim received on account of machinery damaged completely by fire is
(a)  Capital receipt
(b)  Revenue receipt
(c)  Capital expenditures
Ans: (a)

Ques 6: Interest on investments received from UTI is
(a)  Capital receipt
(b)  Revenue receipt
(c)  Capital expenditures
Ans: (b)

Ques 7: Amount received from IDBI as a medium term loan for augmenting working capital is
(a)  Capital expenditures 

(b)  Revenue expenditures
(c)  Capital receipt
Ans: (c)

Ques 8: Revenue from sale of products, ordinarily, is reported as part of the earning in the period in which
(a) The sale is made.
(b)  The cash is collected.
(c) The products are manufactured
Ans: (a)

Ques 9: If repair cost is Rs 25,000, whitewash expenses are Rs 5,000, (both these expenses relate to presently used building) cost of extension of building is Rs 2,50,000 and cost of improvement in electrical wiring system is Rs 19,000; the amount to be expensed is
(a) Rs 2,99,000.
(b) Rs 44,000.
(c) Rs 30,000.
Ans: (c)

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