IGCSE Accounting Paper-2: Specimen Questions with Answers 108 - 108 of 189

Question 108

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Indicate with a tick which type of expenditures are the followings- (Marks 3)

Indicate with a tick which type of expenditures Indicate with a tick which type of expenditures
RevenueCapital
(I) Expenditure of $4000 by a cinema theatre for additional features
(II) Customs duty paid for import of raw material
(III) Wages paid for the extension of building

Explanation

Indicate with a tick which type of expenditures Indicate with a tick which type of expenditures
RevenueCapital
(I) Expenditure of $4000 by a cinema theatre for additional features
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(II) Customs duty paid for import of raw material
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(III) Wages paid for the extension of building
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  • The expenditure is not increasing the earning capacity of the cinema. So, it is a revenue expenditure.
  • Raw materials are current assets (not fixed assets). All expenditures related to the purchase of current assets are revenue expenditures.
  • Building is a fixed asset. Any expenditure related to the extension of a fixed asset is a capital expenditure.

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