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WAEC Financial Accounting 2001 Question 17

Question 17

Capital and Revenue Expenditure

A business firm incurs labour cost in installing machinery. This should be treated as

  1. A.salaries
  2. B.installation cost
  3. C.machinery cost
  4. D.wages
Show the answer and explanation

Answer: C (machinery cost)

Explanation

Costs of getting a fixed asset ready for use, such as installation labour, are capitalised as part of the machinery's cost.