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Question
Give five examples of revenue expenditure.
Solution
- Rent or Property tax.
- Employee salaries and wages.
- Loss from sale of fixed assets.
- Replacement of worn-out parts of existing machines.
- Interest on loan and interest on capital for the period after the asset is put to use.
RELATED QUESTIONS
Explain the rules for deciding whether an expenditure is of revenue nature.
'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.
Classify the following:
Cost of goods purchased for resale.
State with reason whether the following is Capital or Revenue Expenditure:
Cost of replacing the worn-out parts of a machinery.
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Legal expenses ₹ 5,000 on defending a suit for breach of contract to supply goods.
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Import duty on raw materials purchased.
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Interest paid on a loan.
