Capital and Revenue Expenditure Multiple Choice Questions

Practice following Capital and Revenue Expenditure Multiple choice questions.

You may click the link to find Multiple choice questions (Q.No-1 to 10) on Capital and Revenue Receipts and Payments. 

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Capital and Revenue Expenditure Multiple Choice Questions contd.......

11. Which of the following are revenue expenditure for an office equipment dealer?

1. sales promotion costs
2. warehouse extension costs
3. purchase of office equipment for resale
4. purchase of delivery vehicle for sales department

12. The purchase of office furniture was wrongly recorded as repairs to furniture. What is the effect of this error?

13. A retail trader treated a capital expenditure item as revenue expenditure. What       effect will this have on his accounting books?

14.David’s income statement showed a loss for the year of $3500. It was later discovered that repairs to motor vehicles, $600, had been debited to motor vehicles. What was the actual loss for the year? 

15. A Computer system cost $9050. The price included $50 for cartridge refill. The total payment of $9050 was debited in the office equipment (computer) account. What is the effect of this error on the income statement and statement of financial position?

16. An item of revenue expenditure has been incorrectly treated as capital expenditure.  What is the effect of this error?

17. Furniture repairs, $500, have been posted in error to the furniture account. What is the effect on the financial statements?

18. Building repairs, $3500, were debited to the Buildings account. Buildings were depreciated at 5% per annum on balance of the account at the year end.  What is the effect of the error?

19. The cost of office equipment was debited to the purchases account in error. How this error affects the profit for the year and non-current assets?

20. Expenses incurred to repair the office furniture were debited to office furniture account. How would this affect the profit for the year and the non-current assets?

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