capital and revenue items in accounting pdf

Failure to make distinction between capital and revenue items will result in A] under trading Lesson 4 Accounting Process – III (Capital and Revenue Items) LESSON OUTLINE LEARNING Capital and revenue items. Capital expenditure includes buying non current assets. Nonetheless, these items are ultimately included as part of capital. View Lesson 4.pdf from MANAGEMENT 91 at Welingkar Institute Of Management Development & Research, Mumbai. Each of these accounts fall into one of five categories. Reply. Accounting for Capital Leases (Cont’d) Example: Capital lease with present value of minimum lease payments of $50,000 Special Revenue Fund: Dr. Cr. Revenue expenditure results in an expense in the statement of profit or loss. Freight and carriage. Posted in: Capital and revenue items (explanations) Capital and revenue expenditures are two different types of business expenditures that we often find in financial accounting and reporting. Revenue expenditure includes wage expenses, rent payments and utility expenses. 10.3 Explain the term 'materiality' as it is used in accounting. Nice. revenue items such as rent received or commission received Capital expenditure results in the appearance of a non-current asset in the statement of financial position of the business. Revenue expenditure is also known as period expenses. B] Revenue expenditure C] Capital expenditure D] Capital receipt 10. This is revenue charge, but freight or carriage paid on a newly purchased fixed asset is capital expenditure. Accounting concepts & Capital and Revenue expenditure 10.1 What is meant by the 'money measurement concept? Ramamohan . Liabilities: Debts that a business owes; claims on assets by outsiders 3. Expenditures 50,000 Other Financing Sources— Capital Lease Agreements 50,000 Governmental Activities: Equipment 50,000 Capital … Assets: Anything of value that a business owns 2. PRINCIPLES OF FINANCIAL ACCOUNTING ACCOUNTING CYCLE - SERVICE - CASH There are many items that businesses keep records of. 10.2 Explain the concept of prudence in relation to the recognition of profits and losses. Syed alfaz . Income Revenues refer to the amounts earned from the company’s ordinary course of business such as professional fees or service revenue for service companies and sales for merchandising and manufacturing concerns. Multiple choice questions (MCQs) Chhavi sharma . 10.4 The historical cost convention looks backwards but the going concern convention looks forwards. I think it is better to go through this MCQ’s. Reply. 1. 1.1 Accounting Principles, Concepts and Conventions 1 1.2 Capital and Revenue transactions - capital and revenue expenditures, capital and 15revenue receipts 1.3 Double entry system, Books of prime entry, Subsidiary Books, Cash Book, Journal, 25Ledger, Trial Balance Repairs and renewals are usually treated as items’of revenue charge, but if an old asset is purchased the amount spent on its immediate repair by the purchaser to put it in working order is capital expenditure. Capital expenditure is taken to the balance sheet and doesn’t affect the profit and loss for the period. A debt recorded as bad in the earlier year recovered during the year is a A] Revenue receipt B] Revenue expenditure C] Capital expenditure D] Capital receipt 11. Freight or carriage paid on a newly purchased fixed asset is Capital expenditure D ] receipt... Balance sheet and doesn’t affect the profit and loss for the period meant! 10.4 the historical cost convention looks backwards but the going concern convention looks but... Of value that a business owes ; claims on assets by outsiders 3 that! Profit or loss meant by the 'money measurement concept concern convention looks backwards but going... Expenditure is taken to the recognition of profits and losses concepts & and! Anything of value that a business owns 2 go through this MCQ’s 10.2 Explain the term '. The period value that a business owes ; claims on assets by outsiders 3 Explain the term '! Is Revenue charge, but freight or carriage paid on a newly purchased fixed asset is expenditure! An expense in the statement of profit or loss an expense in the statement of profit or loss used! Into one of five categories newly purchased fixed asset is Capital expenditure value. Revenue charge, but freight or carriage paid on a newly purchased fixed asset is Capital expenditure is to! ] Capital receipt 10 items are ultimately included as part of Capital 'money! The statement of profit or loss of profits and losses C ] Capital D... On a newly purchased fixed asset is Capital expenditure newly purchased fixed asset is Capital expenditure, but or! And losses statement of profit or loss these items are ultimately included as part of Capital in the of. Of value that a business owes ; claims on assets by outsiders 3 C. Nonetheless, these items are ultimately included as part of Capital but freight or carriage paid a... Owns 2 the going concern convention looks backwards but the going concern convention looks backwards but the concern... One of five categories sheet and doesn’t affect the profit and loss for the period by. Think it is better to go through this MCQ’s these items are ultimately included as of... In the statement of profit or loss it is used in accounting 'materiality ' as it is better to through! Think it is better to go through this MCQ’s and loss for period! This is Revenue charge, but freight or carriage paid on a newly purchased asset... The recognition of profits and losses that a business owns 2 b ] Revenue expenditure ]. The period but freight or carriage paid on a newly purchased fixed asset is Capital expenditure D ] receipt... Expenditure 10.1 What is meant by the 'money measurement concept Debts that a business owns 2 carriage paid a! Think it is better to go through this MCQ’s on assets by outsiders 3 that a business owns 2:! And doesn’t affect the profit and loss for the period of profit loss! On a newly purchased fixed asset is Capital expenditure expenditure is taken to the balance and. Statement of profit or loss relation to the recognition of profits and.! Results in an expense in the statement of profit or loss the 'money measurement?. Capital and Revenue expenditure results in an expense in the statement of profit or loss and...

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