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11th Accountancy Monthly Test - 1 ( Capital and Revenue transactions )

MABS Institution

11th Accountancy Monthly Test - 1 ( Capital and Revenue transactions )-Aug 2020

Time : 2.30 Hours

Part - A

Multiple Choice Question - Answer All Question

Transaction which provide benefit to the business for more than one year is called as ___________

Capital transaction
Revenue transaction
Neither of the two
None of these

Depreciation on fixed asset is an example of ____________

Capital expenditure
Revenue expenditure
Capital profit
Revenue profit

Cost of acquisition of land and building is an example of __________.

Capital expenditure
Revenue expenditure
Capital receipts
Revenue receipts

Interest on bank deposits is

Capital receipt
Revenue receipt
Capital expenditures
Revenue expenditures

Insurance claim received on account of machinery damaged completely by fire is ____________

Revenue receipt
Revenue expenditures
Capital receipt
Capital expenditures

Amount received from IDBI as a medium term loan for augmenting working capital

Capital expenditures
Revenue expenditures
Revenue receipts
Capital receipt

Expenses on advertisement will be classified under _________

Capital expenditure
Revenue expenditure
Deferred revenue expenditure
Capital receipt

Deferred revenue expenditure is to be written off ___________

In the year in which the expenses are incurred
In the year in which the benefit of expenses are exhausted
Within 3 to 5 years
Within 5 to 10 years

Expenses on research and development will be classified under _____.

Preliminary expense
Revenue expenditure
Capital expenditure
Deferred revenue expenditure

Expenditure incurred Rs.20,000 for trial run of a newly installed machinery will be

Preliminary expense
Revenue expenditure
Capital expenditure
Deferred revenue expenditure

Loss on sale of fixed asset is an example of ____________

Revenue loss
Capital loss
Expenditure
Capital profit

Subsidy of Rs.40,000 received from the government for working capital by a manufacturing concern is __________

Capital receipt
Revenue receipt
Capital expenditure
Revenue receipt

Amount spent on increasing the seating capacity in a cinema hall is

Capital expenditure
Revenue expenditure
Deferred revenue expenditure
None of the above.

The loss which is not incurred in the normal course of business is ___________

Capital loss
Revenue loss
both 'a' and 'b'
None of these

___________ items are to be shown in the Balance sheet.

Capital
Expense
Revenue
Loss

Part - B

Generic 2 - Answer All Question

Classify the following expenditures and receipts as capital or revenue:
i) Rs.10,000 spent as travelling expenses of the directors on trips abroad for the purchase of fixed assets.
ii) Amount received from trade receivables during the year.
iii) Amount spent on demolition of building to construct a large building on the same site.
iv) Insurance claim received on account of a machinery damaged by fire.

State the nature of the following transactions:
i) Carriage paid on goods purchased.
ii) Legal expenses incurred for abuse of trade mark.
iii) Money raised by issue of equity shares.

What is capital profit?

Classify as capital and revenue.
(i) Cost of maintenance of building.
(ii) Investments costing Rs.40,000 were purchased a few years back, were sold for Rs.50,000.
(iii) Annual white washing charges amounted to Rs.1,000.

State whether the following are capital or revenue items.
i. Rs.5,000 spent towards additions to buildings.
ii. Second-hand motorcar purchased for Rs.30,000 and paid Rs.2,000 as repairs immediately.
iii. Rs.10,000 was spent on painting the new factory.
iv. Freight and cartage on the new machine Rs.150, erection charges Rs.200.
v. Rs.150 spent on repairs before using a second hand car purchased recently.

What is capital expenditure?

Explain the features of capital expenditure.

What is Revenue profit?

Mr. Vasudevan gives you the following transactions in his business, classify into capital or revenue.
i) Purchases of goods worth Rs.7,000 for the purpose of Selling.
ii) Rs.1,200 fire insurance for the building for business.
iii) Renewal of magazine subscription fee Rs.125.
iv) Purchased land for Rs.1,00,000.

What is revenue receipts? Give any two examples.

Part - C

Generic 3 - Answer All Question

Distinguish between capital expenditure and revenue expenditure.

What are the classifications of expenditures?

What is deferred revenue expenditure? Give two examples.

Write any three examples of revenue expenditure.

Distinguish between capital receipt and revenue receipt.

Part - D

Generic 5 - Answer All Question

Kumar gives you the following expenses which were incurred in his business during the year 2003, classify them into capital, revenue or deferred revenue.
i) Rs.12,000 spent on purchasing a patent right.
ii) Freight charges paid on new plant amounts to Rs.700
iii) Repairs of Rs.600 for furniture.
iv) Rs.10,000 spent towards expenses connected with rainwater harvesting as per Government orders.
v) Rs.7,500 spent towards initial advertising expenses.

Classify the following items into capital and revenue.
i) Rs.50,000 spent for railway siding.
ii) Loss on sale of old furniture.
iii) Carriage paid on goods sold.

Classify the following receipts into capital and revenue.
i) Sale proceeds of goods Rs.75,000.
ii) Loan borrowed from bank Rs.2,50,000
iii) Sale of investment Rs.1,20,000.
iv) Commission received Rs.30,000.
v) Rs.1,400 wages paid in connection with the erection of new machinery.

Identify the following items into capital or revenue.
i) Audit fees paid Rs.10,000.
ii) Labour welfare expenses Rs.5,000.
iii) Rs.2,000 paid for servicing the company vehicle.
iv) Repair to furniture purchased second hand Rs.3,000.
v) Rent paid for the factory Rs.12,000

Classify the following items into capital and revenue.
i) Registration expenses incurred for the purchase of land.
ii) Repairing charges paid for remodelling the old building purchased.
iii) Carriage paid on goods purchased.
iv) Legal expenses paid for raising of loans

State whether the following expenditures are capital, revenue or deferred revenue.
i) Advertising expenditure, the benefits of which will last for three years.
ii) Registration fees paid at the time of registration of a building.
iii) Expenditure incurred on repairs and whitewashing at the time of purchase of an old building in order to make it usable.

State whether the following are capital or revenue.
i) Repairs made on second hand plant purchased.
ii) Wages paid to workmen for setting up a new plant.
iii) Replacement of old furniture.
iv) Salary paid to staff.
v) Amount received as rent during the year for letting out a portion on sub rent.

Explain briefly any five examples of revenue expenditure becoming capital expenditure.

Classify the following receipts under capital and revenue.
i) Rs.3,00,000 worth of debentures are issued for raising loan.
ii) Rs.5,000 received as dividend from the investment on shares.
iii) Gokul started business with Rs.4,00,000.
iv) A machinery costing Rs.50,000 was sold for Rs.50,000.
v) Creditors allowed discount Rs.30,000.

State whether they are capital and revenue.
i) Construction of building Rs.10,00,000.
ii) Repairs to furniture Rs.50,000.
iii) White-washing the building Rs.80,000
iv) Pulling down the old building and rebuilding Rs.4,00,000

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