a) What is the effect if Capital expenditure is incorrectly recorded as Revenue . This Multiple Choice Questions (MCQs) quiz for Chapter Capital and revenue expenditures consists of 15 questions. For instance, the alteration of accounting entry of the capital expenditure if recorded in the revenue by mistake or intention, it shrink the amount of revenue and profit, while revenue expense if capitalised appreciates the profits, which misrepresent the actual position of the business. As a slate roof is replaced by a glass roof, it will increase the efficiency of the building and therefore, it is a capital expenditure. Once classified as capital expenditure based on the above definition, it is recorded in one of the balance sheet accounts. Please note, revenue expenses does not increase the efficiency of the firm for long term. Revenue expenditure is recurring in nature, while capital expenditures are non-recurring. Read More. Budget to Recorded Revenue and Expenditure Variance Reporting For the month end May FY2019 Confidential 1. Benefits from revenue expenditure will be used in business within the current accounting year. Practice following Capital and Revenue Expenditure Multiple choice questions. True. You should make no assumptions about the meaning of capitalized terms that are not … Railway expenditure is financed from (loan) Capital provided by the General Revenues, Railway Funds and Current Revenues. c) Bought car cushion for the new car. Revenue is used as an indication of earnings quality. Capital expenditure is recorded as a Non-Current Asset; revenue expenditure is recorded as an expense or current asset 6 Identify if the following is capital or revenue expenditure and state why. in scope and nature of this Budget vs Recorded Revenue and Expenditure report with other reporting. Policy on Revenue and Debtors Status: Approved Date: 2012-03-17 File Reference: 3 2.2.7 Evaluation fees 2.3 Recovery of expenditure From time to time contracts are entered into with third parties in terms of which expenditure incurred by SAQA is recoverable. These expenses are subtracted from the revenue that a company generates from sales to eventually arrive at … Historical cost includes acquisition cost less any ancillary costs necessary to put the asset into use . This test is Rated positive by 91% students preparing for CA Foundation.This MCQ test is related to CA Foundation syllabus, prepared by CA Foundation teachers. It allows you to categorize revenue and expenditure according to your needs, identify and analyze the source of the highest revenues and expenditures. Remember Multiple choice questions are having good weightage in the total marks of … •Late RER Notices –Beginning January 2nd –Counties have 30 days to submit a complete and accurate RER. A revenue expenditure occurs when a company spends money on a short-term benefit (i.e., less than 1 year). (xxxiv) Capital expenditure. It is incurred for carrying on business and maintains assets in their existing conditions. •Revenue and expenditure report due date –December 31st, CCR, Section 3510. Revenue expenditure is expenditure which is expensed out in the period in which it is incurred. As a percentage of GDP, EU-28 central governments' total revenue consolidated between subsectors (not taking into account transfers from other subsectors in general government) accounted for 23.2 % of GDP. However, the income and expenditure account only records the income received and expenditure incurred for the actual accounting period, and there are adjustments made for accruals and prepayments. Apart from the cost of land ever other cost is charged to the depreciation expense over the useful life period of the asset. Typically, these expenditures are used to fund ongoing operations – which, when they are expensed, are known as operating expenses. When expensing the item, it goes into the expense side of the income statement, whereas, capitalizing an item will be processed on the balance sheet. If a capital expenditure is recorded as a revenue expenditure it will cause an understatement of net income for that year. Revenue expenditure. Here are example of revenue expenditures; Salaries and wages; Telephone bills Expenditure and revenue of general government present in a simplified way the national accounts of general government. Revenue Expenditure. Total revenue is the aggregate of all transactions recorded under resources in the ESA framework, including subsidies receivable in the current accounts and capital transfers receivable recorded in the capital account. This cost is recorded in an account that is classified as Property. Revenue expenditures are recorded in the (a) Manufacturing A/c (b) Trading A/c (c) P & L A/c (d) All the above 10. Capital expenditure, except for the cost of land, is usually depreciated or amortized over the economic useful life of the asset. Capital Expenditure. In the EU-28 in 2016, central government accounted for 51.9 % of total revenue and 37.6 % of total expenditure of general government. Revenue expenditures are current expenses and include ordinary repairs, maintenance, fuel, and other items required to keep the asset in normal working condition. Revenue expenditures or operating expenses are recorded on the income statement. It is not until the expenditure is recorded as an expense that income is impacted. Revenue expenditures are recorded in the Manufacturing account, Trading account and Profit & loss account. Can u explain this?? Related Questions on Accounting. The following points of difference between capital expenditure and revenue expenditure gives the importance of the distinction: 1. This is recorded as an advance to the retail bank together with a corresponding currency in circulation expense entry, that is, the income derived from the Official Cash rate payable by the retail banks for instruments such as 90-day bills. You may click the link to find Multiple choice questions (Q.No-1 to 10) on Capital and Revenue Receipts and Payments.. Accruals: the accounting convention whereby an expenditure or revenue is recorded at the time when it has been incurred or earned rather than when the money is paid or received. Warning. If patent is renewed annually, then it is a revenue expenditure as it has been incurred in the ordinary course of business. Revenue Expenditure. detailed heads of account under which expenditure is recorded in the accounting books of the Railway. B. d) Bought air freshener for the new car. Whereas the initial purchase and installation costs would be classified as capital expenditure, any subsequent repair and maintenance charges incurred in the future will be classified as revenue expenditure. They register almost only the actual monetary flows and exclude most of the imputed flows of the national accounts. expenditure? Revenue Expenditure: It constitutes the expenditure incurred for the payment of money for services of whatever type such rent, salaries, commission, repair, carriage etc. Incorrect treatment of expenditure . Examples of such contracts are … Company's tax liability for a particular year. False. For example; routine repairs, these are revenue expenditures due to the fact that they’re charged . The disposal of a general capital asset, resulting in no revenue or expenditure to the government, is recorded only in the governmental activities accounts. 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