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JAMB Principles of Accounts 2013 Question 8

Question 8

Capital and Revenue Expenditure

Which of the following items is a capital expenditure?

  1. A.Maintenance of office machine.
  2. B.Purchase of office stationery.
  3. C.Carriage inwards.
  4. D.Purchase of office machinery.
Show the answer and explanation

Answer: D (Purchase of office machinery.)

Explanation

Buying a machine gives a fixed asset used for years, so it is capital expenditure; the others are running costs.