Capital and Revenue Expenditure Worksheet.

Capital and Revenue Expenditure and Receipts worksheet-1

The following Capital and Revenue expenditure worksheet-1 covers all the aspects of Capital and Revenue Expenditure and Receipts.  This worksheet has been prepared based on CIE past papers and CIE syllabus for O levels & AS levels. Hence, independent practice of these worksheets (Worksheet-1 and Worksheet-2) boost the pupil's confidence and morale.  As answers are not provided for these worksheet questions, you may use the comments section below or forum on this website to discuss difficult aspects of this worksheet.  We love to help you if you have any difficulty in practicing this worksheet. Educators may download these worksheets (Printable PDF form) from resources section of this website for classroom use. 


Capital and Revenue Expenditure Worksheet - 1.

Note: There are 9 questions (A to I) in this Capital and Revenue Expenditure Worksheet.

A.   Explain the difference between capital and revenue expenditure.

B.   Explain the difference between capital and revenue receipts.

C.   Define the term ‘revenue receipt’.

D.   Explain each of the following accounting terms.

        (i) Revenue expenditure

        (ii) Capital receipt

        (iii) Revenue Receipt

        (iv) Capital expenditure

E.   Classify whether each transaction is a revenue expenditure, a revenue receipt, a       capital expenditure or a capital receipt.

  1. Sold office euipment
  2. Cash discount received from the supplier
  3. Payment of property insurance
  4. Bought a delivery vehicle
  5. Purchase of motor vehicle
  6. Purchase of new motor vehicle tyres
  7. Received interest on deposit account
  8. Took out long term loan from the bank
  9. Received sales commission
  10. Sale of motor vehicle

F.   During the year ended 31st December 2017, Exotic Fresh LLP carried out work on it’s property.  Indicate which of the following is capital expenditure or revenue expenditure.

  1. Built an extension to it’s existing property
  2. Bought a new computer system for the business.
  3. Redecorated the interiors in the entire property.
  4. Installation and testing air conditioning in the extended property
  5. Started advertising campaign about the improvement of the property.
  6. Purchased computer CDs for office use.
  7. Purchase of office furniture and fittings.
  8. Insurance of entire property.
  9. Purchase of loose tools for property.
  10. Repairs to office furniture.

G. The following balances are included in Tim’s books of accounts:

Balances $
Purchases of inventory 54,000
Staff salaries 14,800
Cash discount allowed 1,600
Purchases of delivery van 21,900
Investment Income 900
Annual maintenance of delivery van 1,200
Power and electricity 1,300
Revenue from sale of inventory 98,000
Delivery of van from manufacturer 1,000
Diesel for delivery van 500
Loan against mortagage 18,000
Sign writing Tim's business name on the delivery van 600
Sale of old equipment 2,000
Delivery van insurance 500
Finance costs 1,200
Replacement of tyres for delivery van 800

REQUIRED:  Identify the revenue income, revenue expenditure, capital expenditure and capital income from the above balances.

H.   Indicate which of the following is capital receipt or revenue receipt.

  • Aid received from the government for improvement of solar power system.
  • Revenue from sale of inventory
  • Very short term Loan from a bank
  • Disposal of old equipment.
  • Discount received
  • Long term loan from a bank
  • Commission received
  • Sale of a motor vehicle

I. The following financial statements, which contain errors, were prepared by an inexperienced book-keeper.

Income Statement for the year ended 31 December 2017.

Particulars $ $
Revenue 90,000
Income from sale of non-current assets 10,000
100,000
Cost of goods sold (55,000)
Gross profit 45,000
Sundry expenses 10,000
Purchase of non-current assets 20,000 (30,000)
Profit for the year 15,000

Statement of financial position as at 31 December 2017.

Particulars $ $
Rent and Rates paid 4,000
Inventory 6,000
Trade Receivables 2,500
Cash equalients 1,500
14,000
Trade payables 1,200
Discounts received 800 (2,000)
12,000
Capital 8,000
Profit for the year 15,000
23,000
Drawings (11,000)
12,000

REQUIRED:

  1. Identify the items of capital and revenue income and expenditure which have been incorrectly treated in the above financial statements. Explain how and where each item should have been included in the financial statements.
  2. Calculate the corrected net profit for the year ended 31 December 2017.           

End of Capital and Revenue Expenditure worksheet (1).


Is this Capital and Revenue Expenditure worksheet - 1 is not enough for your practice? Want more worksheets? Check out Worksheet-2 on "Capital and Revenue Expenditure and Receipts" or Visit this external resource Page for additional practice! All the best!


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