MCQs on Financial Accounting - 7

1. An expenditure is a revenue expenditure because

(a) The amount is small
(b) It is intended to benefit the current period
(c) It is deducted from the gross sale proceeds
(d) None of these.

2. A receipt is a revenue receipt because

(a) The amount is small
(b) It is received in the accounting year
(c) It related to the routine activity of business,
(d) All of these.

3. A receipt is a capital receipt because

(a) The amount is heavy
(b) It is credited to capital account
(c) It relates to fixed assets
(d) It is received not in the regular course of business.

4. A loss is a capital loss because

(a) it arises due to abnormal reasons
(b) it means withdrawal of capital
(c) It relates to current assets
(d) None of these.

5. A loss is a revenue loss because

(a) It is incurred to reduce the tax liability
(b) It arises due to normal reasons
(c) It relates to current assets
(d) None of these.

6. An expenditure is treated as that of a capital nature, when

(a) the receiver of the amount is going to use it for the purchase of fixed assets,
(b) it increases the quantity of fixed assets,
(c) it is paid for meeting the normal expenses of the business,
(d) none of these.

7. Rs. 5,000 spent on replacement of worn-out part of the machine will be charged as

(a) capital expenditure 
(b) Revenue expenditure
(c) Deferred revenue expenditure 
(d) None of these.

8. Which one is revenue expenditure ?

(a) Interest on capital,
(b) Cost of building
(c) installation expenses of mechanic purchased,
(d) price of new car purchased for the M.D.

9. Which one is capital expenditure ?

(a) heavy repairs on used building,
(b) expenses incurred on acquisition of machines,
(c) Purchase of land for factory
(d) all of these

10. Which is deferred revenue expenditure ?

(a) expenditure on specific research and development,
(b) expenses on purchase of patents
(c) legal expenses on purchase of trademarks,
(d) heavy repairs on used mechanize at the time of purchase.

More MCQs on Financial Accounting


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