The correct answer is: A. a-4, b-1, c-2, d-3
Preliminary expenses are incurred in connection with the formation of a company. They are not revenue expenditure as they do not result in the creation of an asset or the rendering of a service. They are, therefore, capital expenditure.
Interest on loan for business is a revenue expenditure as it is incurred in the course of earning revenue.
Life subscription is a capital receipt as it is a receipt of money in consideration of the transfer of an asset.
Interest on bank deposits is a revenue receipt as it is a receipt of money in consideration of the lending of money.
Here is a brief explanation of each option:
- Option A: a-4, b-1, c-2, d-3
This option is correct as it correctly matches the items in List-I with the items in List-II.
- Option B: a-3, b-1, c-4, d-2
This option is incorrect as it incorrectly matches the item “a. Preliminary expenses” with the item “3. Deferred revenue expenditure”. Preliminary expenses are capital expenditure, not deferred revenue expenditure.
- Option C: a-4, b-3, c-2, d-1
This option is incorrect as it incorrectly matches the item “b. Interest on loan for business” with the item “2. Revenue receipts”. Interest on loan for business is a revenue expenditure, not a revenue receipt.
- Option D: a-3, b-2, c-1, d-4
This option is incorrect as it incorrectly matches the item “c. Life subscription” with the item “4. Capital Receipts”. Life subscription is a capital receipt, not a capital expenditure.