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GCE Financial Accounting 1989 Question 34

Question 34

Capital and Revenue Expenditure

Which of the following is not true of capital expenditure? I. Assets acquired for the purpose of earning income II. Extension of office building III. It is incurred and its full benefits consumed in one period of account.

  1. A.I only
  2. B.II only
  3. C.I and II only
  4. D.II and III only
  5. E.III only
Show the answer and explanation

Answer: E (III only)

Explanation

Capital expenditure gives benefits over many years; spending used up within one period is revenue expenditure.