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प्रश्न
Explain the rules for deciding whether an expenditure is of revenue nature.
उत्तर
Rules for Determining Revenue Expenditure:
- Revenue expenditure refers to any non-capital expenditure that temporarily impacts a company's profit potential. An expense is considered revenue if it is incurred for the following purposes: daily business expenses with short-term rewards.
- Examples include employee salary, interest on borrowed capital, rent and selling charges.
- Expenditure on consumable things, goods, and services for resale, either in original or upgraded condition.
- Raw materials, office supplies, and other items are examples of such purchases. Some revenue items, such as stock and stationery, may still be available at the end of the year.
- These are typically carried over to the following year despite being acquired in previous year as well.
- Expenditures Incurred for keeping fixed assets in working order. For example. Repairs, renewals and depreciation.
Some examples of Revenue Expenditures include:
- Salaries and salaries for employees.
- Rent and prices for manufacturing or office space.
- Depreciation of plant and machinery.
- Consumable stores.
- Inventory includes raw materials, work-in-progress, and finished goods. Additionally, there is an insurance cost.
- Taxes and legal fees.
- Miscellaneous expenses.
संबंधित प्रश्न
An expenditure is Revenue expenditure if ______.
Revenue expenditure is incurred ______.
This expenditure relates to normal functioning of the government departments and provision of various government services. The main examples of such expenditures are salaries, pensions, interest, subsidies, grants to the state governments, etc.
What is meant by Revenue Expenditure?
State with reason whether the following is Capital or Revenue Expenditure:
Freight on goods sold.
State whether the following is Capital, Revenue or Deferred Revenue Expenditure.
Cost of removing the stock to a better located site.
Classify the following into Capital, Revenue and Deferred Revenue Expenditures, reason for your answer.
Legal expenses ₹ 5,000 on defending a suit for breach of contract to supply goods.
State whether the following expense is Capital or Revenue.
Excise duty paid to the Government.
State whether the following expense is Capital or Revenue.
Legal expenses incurred for defending a suit of income tax.
Classify the following into capital expenditure and revenue expenditure.
Repairs of office furniture.
