Advertisements
Advertisements
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
Give six examples of revenue expenditure becoming capital expenditure.
'Whether an expenditure is of revenue or capital nature, is a question of fact and must depend on the circumstances of each case." Comment, giving appropriate examples.
State whether the following is Capital, Revenue or Deferred Revenue Expenditure.
Legal expenses for defending the ownership of a trade mark.
State whether the following is Capital, Revenue or Deferred Revenue Expenditure.
Cost of removing the stock to a better located site.
State whether the following is Capital, Revenue or Deferred Revenue Expenditure.
Purchase of raw materials.
Classify the following into Capital, Revenue and Deferred Revenue Expenditures, reason for your answer.
₹ 20,000 spent on dismantling, removing and reinstalling plant and machinery.
State whether the following expense is Capital or Revenue.
Purchase of typewriters for resale.
State, whether you would consider the following as Capital Expenditure or Revenue Expenditure.
Repairs of typewriters.
Classify the following:
Insurance premium.
Classify the following:
Cost of shifting the stock to the new site.
