[amp_mcq option1=”A revenue expenditure” option2=”A deferred revenue expenditure” option3=”A capital expenditure” option4=”A charge on the profits of the business” correct=”option3″]<\/p>\n
The correct answer is C. A capital expenditure.<\/p>\n
A capital expenditure is an expenditure that is incurred on the purchase of fixed assets, such as land, buildings, and equipment. These assets are expected to have a useful life of more than one year and are used in the production of goods or services.<\/p>\n
Revenue expenditure is an expenditure that is incurred on the day-to-day running of a business. These expenditures are not expected to have a lasting benefit and are not capitalized.<\/p>\n
Deferred revenue expenditure is an expenditure that is incurred in one accounting period but is not recognized as an expense in that period. Instead, it is deferred and recognized as an expense in a future period.<\/p>\n
A charge on the profits of the business is an expense that is deducted from the profits of a business in order to arrive at the taxable income of the business.<\/p>\n
In the case of the expenditure incurred for enhancing the capacity of an existing equipment, this is a capital expenditure because it is an expenditure that is incurred on the purchase of a fixed asset. The asset is expected to have a useful life of more than one year and will be used in the production of goods or services.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”A revenue expenditure” option2=”A deferred revenue expenditure” option3=”A capital expenditure” option4=”A charge on the profits of the business” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-44949","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"\n