A-AS Level (CIE) Accounting Paper-1: Specimen Questions with Answers 70 - 70 of 93

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Question 70

Question

Match List-Ⅰ List-Ⅱ▾

Match List I (Items of Expenditure and Receipt) with List II (Nature of Expenditure and Receipt) and select correct answer using the codes given below:

List-ⅠList-Ⅱ
(A)

Insurance premium paid for risks against accidental losses of properties (fixed assets)

(i)

Capital expenditure

(B)

Premium paid for a leasehold property

(ii)

Capital receipt

(C)

Amount realized from the sale of securities (investments) purchased earlier

(iii)

Deferred revenue expenditure

(D)

Huge sale promotion expenses

(iv)

Revenue expenditure

Choices

Choice (4)
  • (A)
  • (B)
  • (C)
  • (D)

a.

  • (iv)
  • (i)
  • (ii)
  • (iii)

b.

  • (i)
  • (iii)
  • (iv)
  • (ii)

c.

  • (i)
  • (ii)
  • (iii)
  • (iv)

d.

  • (ii)
  • (i)
  • (iv)
  • (iii)

Answer

a.

Explanation

  • Revenue expenditure: It is a routine expenditure incurred in the normal course of business and includes cost of sales and maintenance of fixed assets. It maintains the earning capacity.
  • Capital expenditure: Capital expenditure is incurred in improving permanent assets not meant for resale. It may add to value of an existing asset.
  • Capital receipt: Capital receipt is the amount received by the sale of fixed assets or receipts from loan taken. It is shown in the balance sheet. It is of usually recurring nature.
  • Deferred revenue expenditure: Deferred revenue expenditure is revenue expenditure in nature but it is written off to profit and loss account in more than one accounting period.

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