wages paid for installation of machinery is a revenue expenditure

Installation of an air conditioning system. Other examples are: money paid for goodwill (the right to use the established name of an outgoing firm) since it will attract the old firm’s customers and, thus, result in higher sales and profits; money spent to reduce working expenses, for example, conversion of hand-driven machinery to power-driven machinery and expenditure enabling a firm to produce a large quantity of goods. 3. Structural improvement or alterations as to fixed assets which increase their life or earning capacity. For example – Purchase of Machinery or installation of equipment to the machinery which will improve its productivity capacity or life years. Additions or extension of existing fixed assets. Definition of Revenue Expenditure The expenditure which is incurred on a regular basis for conducting the operational activities of the business are known as Revenue expenditure like the purchase of stock, carriage, freight, etc.. Learn vocabulary, terms, and more with flashcards, games, and other study tools. For Example: Huge Advertisement Expenditure. are treated as CAPITAL EXPENDITURE and debited to … Q: State with reasons whether the following expenditure items are capital or revenue in nature: Purchase of Land. 2. In the same way, wage is generally revenue expenditure, but wage paid for the installation and erection of machinery is a capital expenditure. Expenditure connected with the purchase of fixed asset are called capitalized expenditure e.g. Purchase Price. Wages − If paid to build up assets or for the erection and installation of Plant and Machinery. Generally, wages are revenue expenses but wages paid to employees engaged in the construction or installation of the fixed assets of the businessare capital expenditures. (iii) Repairs carried out on existing car. Carriage and Freight: These are also revenue expenditures but Carriage and Freight paid for bringing the machine to the godown, then it is treated as Capital expenditure. Start studying Financial Accounting Ch.9 Part 6 (Capital or Revenue Expenditure). B. 2. The definition of an asset's cost is all costs that are necessary to get an asset in place and ready for use. Deferred Revenue Expenditure Some non-recurring and special nature of expenditure for which heavy amount is incurred and the benefits for the same spreads to upcoming years, such expenditure is to be treated as capital expenditure and will show as assets of the firm. Expenses incurred by way of repairs, renewals and replacement for the purpose of maintaining the existing fixed assets of the business in working order. How to measure the acquisition cost of property, plant and equipment? Solution 6: Purchase of machinery. ... Wages paid for installation of machinery. State with reasons whether the following are capital or revenue expenditures: (i) A new machine is purchased for ₹ 60,000, ₹ 800 were spent on its carriage and ₹ 1,500 were paid as wages for its installation. (iii) ₹ 5,000 paid for the erection of a new machine. The business expenditures are of two types:-, An expenditure is a capital expenditure if the benefit of the expenditure extends to several trading years. Comparison Between Different Cost Flow Assumptions, Application of different Cost Flow Assumptions, How to Determine the Cost of Ending Inventory, Time series analysis and seasonal variations, Introduction to cost accounting – MCQs quiz, Cost Concept, Analysis and Classifications MCQs, Expenditure incurred on the acquisition of fixed. answer choices . 3) Deferred Revenue Expenditure: There are certain expenditures which are revenue in nature but benefit of which is derived over number of years. DEFERRED REVENUE EXPENDITURE: Some of the expenditure may be available for a period of two or three or even more years. Terms in this set (11) Sales tax paid on the purchase price. more Capitalization: The Whys and Hows However, any subsequent cost incurred on the repair and maintenance of the company will be considered as the revenue expenditure. Wages − If paid to build up assets or for erection and installation of Plant and Machinery. 10,000, the amount of Rs. Expenditure incurred for the purpose of floating assets i.e., asset for resale purpose such as cost of merchandise, raw-material and stores required for manufacturing process. Installation of an air conditioning system. Bad debts 1,100 Interest paid on loan 3,000 Additional Information: 1. Examples of Revenue expenditures: Following are the important Items of revenue expenditure: CFA Institute Does Not Endorse, Promote, Or Warrant The Accuracy Or Quality Of WallStreetMojo. But when wages and salaries are spent for the construction of a building or for installation of a machine then it is treated as Capital expenditure. Installation of Plant and Machinery; Expenditure incurred during the erection of Machinery. (iii) Installation costs of new production machine should be treated as a Capital Expenditure because it will benefit the business for more than one accounting period. (3) Wages paid for installation of machinery (4) Road tax paid View Answer Immediately after purchasing a new truck, Rs 1,000 is paid to have the name of the company and … 3. Payments made to the related parties should commensurate with the actual services performed by them (reasonable as compared to an independent employee with the same qualification and experience performing the same services). But when wages and salaries are spent for the construction of a building or for installation of a machine then it is treated as Capital expenditure. I. EXPLANATORY NOTES Abstract 'N' Suspense is intended for the temporary booking of certain classes of transactions pending adjustment to final heads of account and to record the expenditure in the accounts of a month to which it relates irrespective of whether the same has actually been liquidated. For that purpose, it buys a machine so that the bakery items can be produced. State with reasons whether the following are capital or revenue expenditures: (i) A new machine is purchased for ₹ 60,000, ₹ 800 were spent on its carriage and ₹ 1,500 were paid as wages for its installation. Expenditure incurred to maintain the fixed assets in proper working condition such as repair, replacement and renewals of building, furniture, machinery etc. Expenditure on installation of machinery. All expenses incurred in the ordinary conduct of business, such as rent, salaries, wages, manufacturing expenses, carriage, commission, legal charges, insurance and advertisement, free samples, salaries, postage expenses etc. Revenue expenditure is the running expenses of the company ; Raw materials, Salary and allowances, wages payments, printing and stationery, repair of fixed assets are the common example of revenue expenses. The expenditure incurred for the following purposes will be treated as revenue expenditure. Revenue expenditure is the running expenses of the company ; Raw materials, Salary and allowances, wages payments, printing and stationery, repair of fixed assets are the common example of revenue expenses. (iii) ₹ 5,000 paid for the erection of a new machine. Then we paid wages $1,000 for its installation in the factory. 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. DEFERRED REVENUE EXPENDITURE: Some of the expenditure may be available for a period of two or three or even more years. With this concept, the income statement results will give more accurate results to the user of the income statement of the company. 1,200 is paid as dealer's commission. So, these are considered to be revenue expenditures. Transportation and insurance while machinery is in transit from seller to buyer. For Example: Huge Advertisement Expenditure. Which of these is NOT a list of revenue expenditure? Wages − If paid to build up assets or for erection and installation of Plant and Machinery. This article has been a guide to Revenue Expenditure and its meaning. Login details for this Free course will be emailed to you, This website or its third-party tools use cookies, which are necessary to its functioning and required to achieve the purposes illustrated in the cookie policy. Wages paid for manufacture of products for sale. Examples are salaries and wages, fuel used to drive machinery, electricity used to light the factory or offices, etc. The cost of fixed assets would include all expenditures necessary up to the time the asset is ready for use, for instance, cost of all building purchased would include the price paid to the seller, legal charges and broker’s commission. D) Interest paid on loans raised to acquire a fixed asset etc. Following are the most important items of capital expenditure:-. Examples of Revenue expenditures. Save my name, email, and website in this browser for the next time I comment. Commission paid to a worker. Revenue expenses are expenses incurred by the business in the daily working of the business and the effect of which will completely be utilized within the current accounting year in which it incurred. Revenue expenditure does not increase the efficiency of the firm. Examples of Revenue Expenditure. Carriage and Freight: These are also revenue expenditures but Carriage and Freight paid for bringing the machine to the godown, then it is treated as Capital expenditure. It is not sure about which expenditure to be treated as revenue expenditure. $1,000 was paid for installation charges. Capital Expenditure. How should it be treated? For example – Purchase of Machinery or installation of equipment to the machinery which will improve its productivity capacity or life years. Excessive salary, bonus and commission paid to the sole-proprietor / partner's related parties that are not in line with market rate (not arm's length). Capital expenditures are major investments of capital to expand a company's business. Revenue Expenditure: Definition and Explanation: All the expenditures which are incurred in the day to day conduct and administration of a business and the effect-of which is completely exhausted within the current accounting year are known as "revenue expenditures".These expenditures are recurring by nature i.e. New Year Offer - All in One Financial Analyst Bundle (250+ Courses, 40+ Projects) View More, All in One Financial Analyst Bundle (250+ Courses, 40+ Projects), 250+ Courses | 40+ Projects | 1000+ Hours | Full Lifetime Access | Certificate of Completion, It is primarily two types – one is related to the, These expense to be recorded in the same period when revenue is generated on produced of goods or service (, The amount spent every year, required for generating the revenue or maintenance of revenue-generating assets will be considered as the revenue expenditures. Revenue Expenditure: Definition and Explanation: All the expenditures which are incurred in the day to day conduct and administration of a business and the effect-of which is completely exhausted within the current accounting year are known as "revenue expenditures".These expenditures are recurring by nature i.e. ... SURVEY . Here we discuss the list of examples of the revenue expenditure along with its types and detailed explanation. 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. Following are the important Items of revenue expenditure: All expenses incurred in the ordinary conduct of business, such as rent, salaries, wages, manufacturing expenses, carriage, commission, legal charges, insurance and advertisement, free samples, salaries, postage expenses etc. These expenses are neither incurred to acquire capital assets nor the benefits of such expenditure is received in the same accounting period during which they were paid. Expenditure which results in an increase in the earning capacity of a business. The Treatments of Capital and Revenue Expenditures Capital expenditures are shown in the Balance Sheet Assets Side while Revenue Expenditures are shown in the Trading and Profit And Loss Account debit side. Revenue expenditure is the sum of the expense that the business incurs in the production of goods and services, which helps for revenue generation of the company in an accounting period. For all these expenditures, we should debit machinery account instead of debiting carriage A/c, octroi A/c and wages A/c. Answer. Identify between capital and revenue expenditure the purchase of new production machinery? Transaction Type (i) The purchase of machinery for use in the business. Purchases include sales return of ` 2,575 and sales include purchases return of ` 1,725. Capital expenditures (CapEx) are funds used by a company to acquire or upgrade physical assets such as property, buildings, or equipment. Revenue expenditure is the expenditure incurred by the company during its ordinary course of business operations. For example a business might incur wage costs, pay rent on its premises, or carry out repairs on its plant and machinery. Company ABC Ltd. started the business of manufacturing and selling bakery items in the market. Paid $90,000 in cash for installation of equipment in (4) C Identify each of the following items as either a capital expenditure (C), expense on the income statement (E), or neither (N) Repair of truck met with an accident. These costs are recurring in nature and do not form the part of the fixed asset cost. 30 seconds . By closing this banner, scrolling this page, clicking a link or continuing to browse otherwise, you agree to our Privacy Policy. Capital expenditures are major investments of capital to expand a company's business. When companies make a revenue expenditure, the expense provides immediate benefits, rather than long term ones.Examples of revenue expenditure are wages or salaries paid to factory workers, machine … Accounting for Labor to Install Asset. 1,000 is spent on its repairs, Rs. HARD. Expenditure on installation of machinery. Capital and revenue expenditures Page 4 (vi) Wages paid by a building contractor to his own workmen for the erection of an office in the builder’s stockyard. In the same way, wages are generally a revenue expenditure, but wages paid for the installation and erection of a machinery is a capital expenditure. A. ... Air ticket paid for the purchase of machinery. (iv) Materials for extension to foremen’s offices in the factory should be treated as a Capital Expenditure because it will benefit the business for more than one accounting period. Thus they are shown in the statement of income of the year in which they are incurred. Generally, wages are revenue expenses but wages paid to employees engaged in the construction or installation of the fixed assets of the business are capital expenditures. Repair charges of furniture. Goods withdrawn by Mr. XYZ for own consumption ` 3,500 included in purchases. Development Expenditure − In some businesses, long-term development and heavy amount of investment is required before starting production especially in Tea and Rubber plantation; such expenditure should be treated as capital expenditure. 30 seconds . The purpose of capitalizing costs is to better line up the cost of using an asset with the length of time in which the asset is generating revenue. The direct expense is expense occur from the production of raw material to final goods and service. Revenue expenses are short-term expenses to meet the ongoing operational costs of running a business. ... SURVEY . Following are the important Items of revenue expenditure: Even as a non accounting person, able to easily understand the concept, thanks for your help, and your good insight. The amount debited to car account will be In the present case amount spent every year for making pens and packing it to employees, Utility bills, wages to workers, insurance, rent, etc., will be categorized as the revenue expenditure. SURVEY . Revenue expenditure refers to those expenditures which are incurred during normal business operation by the company, benefit of which will be received in the same period and the example of which includes rent expenses, utility expenses, salary expenses, insurance expenses, commission expenses, manufacturing expenses, legal expenses, postage and printing expenses, etc. Generally, such expenditures will be divided into two categories, i.e., expenses on maintenance of revenue-generating assets and the expenses on things used for generating the revenue of the business. Interest on capital during construction period. An item of expenditure whose benefit expires within the year is revenue expenditure. Capital expenditure may include the following expenditures:-. Revenue expenditure is expenditure incurred for the purpose of the organisations daily activity, services or to maintain fixed assets. Ordinary Recurring Repairs To Keep The Machinery In Good Working Order. The company spends each year for various expenditures such as manufacturing of pens, salaries to employees, Utility bills, repairs and maintenance, acquisition of the assets, etc. An item of expenditure whose benefit expires within the year or expenditure which mere seeks to maintain the business or keep assets in good working condition is revenue expenditure Examples are : salaries and wages, fuel used to drive machinery, electricity used to light the factory or offices, etc. In the present case, the initial purchase cost of the machinery, along with the installation costs will be classified by the business as the capital expenditure because the benefit of the machinery will be derived by the business for the. Cost of goodwill, trademarks, patents, copyright, patterns and designs. 500 is incurred to get the car registered in owner's name and Rs. Question 6. The indirect expense is expenses occur indirectly; they are generated in connection with the selling of goods and services and its distribution. Freight and cartage paid on merchandise purchased. All of these expenditures are incurred for the purposes of the trade and are expected to be consumed within one year. Development expenses in case of mines and plantations. Here the benefit will also be received in the same accounting period in which expenses incurred, and it shows as the expense in the income statement of the company. The owner of the company is arguing that it should be treated as revenue Expenditure. B. The new machine requires routine maintenance of $3,000 each month. Any expenditure which is incurred for raising capital money for business, such as commission and brokerage paid to agent for arranging long term loans, discount on issue of shares and debentures. The expenses incurred for the purchasing of goods for resale and selling and distribution of the goods also comes under Revenue Expenditure. Tags: Question 9 . Purchase of Furniture Repairs to Machinery Extension of Office Installation of Equipment. B) Fees paid to a lawyer for drawing up the purchase deed of land, C) Overhaul expenses of second-hand machinery etc. Payment of wages is classified as a normal running cost of a business, so is stated under revenue expenditure. Identify between capital and revenue expenditure the purchase of new production machinery? For example, to a machinery dealer purchase of machinery is a revenue expenditure, while machinery purchased for manufacturing goods is a capital expenditure. It is because when the cost of repair and maintenance incurs, that neither increases the earning capacity of the machine. Wages − If paid to build up assets or for the erection and installation of Plant and Machinery. current period only. (iii) Revenue Expenditure (iv) Revenue Expenditure (v) Capital Expenditure Q.2 State with reasons whether the following are Capital or Revenue Expenses: (i) Excise duty paid on purchase of new machine. it's generally considered revenue HOWEVER there is an argument to say that the first time you tax it, it could be considered capital expenditure as it's part of the cost of getting it on the road (kind of like an installation fee for machinery/ equipment) but then the subsequent times you tax it in the following years/months would definitely be considered revenue Question: Consider The Expenditures Listed Below And Classify Each Of The Expenditures As A Capital Expenditure Or A Revenue Expenditure Related To Machinery. For example, a company buys a machine for the production of biscuits. A. The direct expense example is wages of labor, shipping cost, power, and electricity bill cost, rent, commission, legal expense, etc. (ii) A sum of ₹ 10,000 was spent on painting the new factory. ... Air ticket paid for the purchase of machinery. It includes the spending by the company on the expense, which will match with the reported revenues on the statement of income of the current year. D. Rent of a factory. Revenue expenditure is money which is spent on running the business on a day-to-day basis. (iv) Office block of building repainted for ₹ 50,000. Purchases include sales return of ` 2,575 and sales include purchases return of ` 1,725. Q. Bad debts 1,100 Interest paid on loan 3,000 Additional Information: 1. Stationery, supplies, merchandise. Octroi duty A/c is debited. Office air conditioning system. C. Lubrication Before Machinery … You can learn more about accounting from the following articles –, Copyright © 2020. For example employees pay, travel expenses and IT You will Learn Basics of Accounting in Just 1 Hour, Guaranteed! Expenses incurred on installation of a new machine. (ii) A sum of ₹ 10,000 was spent on painting the new factory. will be treated as the capital expenditure of the company. Therefore, the cost of the installation labor (wages and related fringe benefits) is part of the cost of the asset (and not an immediate expense of the accounting period). Deferred Revenue Expenditure is revenue expenditure, incurred to receive benefits over a number of years say 3 or 5 years. Money spent on the improvement of existing assets so as to increase their life or reduce the cost of production, for example, conversion of hand driven machine to power-driven machine. Unless you're an accountant who is also a small-business owner, accounting terms can be confusing. Additionally, expenses incurred to acquire any of the assets or improve the capacity or life of the assets will be treated as the. Definition and explanation of capital expenditures: Definition and explanation of revenue expenditures: Capital and revenue expenditures multiple choice questions (MCQs), Rules for determining revenue expenditures, Difference between capital and revenue expenditures, Items of revenue expenditures becoming capital expenditures, Distribution of profit & loss – Fill in the blanks, Factory Overhead Practical Problems and Solutions, Important Techniques of Factory Overhead Costing, Labour Costing Practical questions with answers, Job Order Costing Examples, Practical Problems and Solutions, Cost of production report (CPR) questions and answers. REVENUE EXPENDITURE. An item of expenditure whose benefit expires within the year or expenditure which merely seeks to maintain the business or keep assets in good working condition is revenue expenditure. State with reasons whether the following are capital or revenue expenditures: (i) A new machine is purchased for ₹ 60,000, ₹ 800 were spent on its carriage and ₹ 1,500 were paid as wages for its installation. Wages paid in the month of April for installation of plant and machinery … Purchase of machine, furniture, motor vehicle, office equipment etc. The machine will be going to produce the same quantity of the bakery products as it used to do earlier when first it was put to use by the business, nor will it increase the life expectancy of the machinery. Expenditure on installation of plant and machinery and other office equipment. Examples of Revenue expenditures: Following are the important Items of revenue expenditure: Tags: Question 9 . Question: Consider The Expenditures Listed Below And Classify Each Of The Expenditures As A Capital Expenditure Or A Revenue Expenditure Related To Machinery. It is charged at the expense in the statement of income as soon as the cost is incurred as by this business is using the accounting principle of matching for linking the expense incurred with the revenues generated in the same reporting period. Apart from this, any cost of repair on machines, used for the manufacturing of pens, will also be considered revenue expenditure. Purchase Price. Let's assume that a company made a capital expenditure of $100,000 to install a high efficiency machine. Direct expenditure is that which can be conveniently allocated to a particular job or product or unit of service. I got really confused with this one aswell. (ii) Wages paid to install a machine. (ii) Wages paid to install a machine. CFA® And Chartered Financial Analyst® Are Registered Trademarks Owned By CFA Institute.Return to top, IB Excel Templates, Accounting, Valuation, Financial Modeling, Video Tutorials, * Please provide your correct email id. I.e., the life of the machinery will remain the same as it was at the start, and the. Which of these is NOT a list of revenue expenditure? Example of Revenue Expenditure. (v) Revenue expenditure. For instance, expenditure incurred in removing the business to a certain locality or better Situation premises and money paid for goodwill (the right to use the established name of outgoing firm) since it will attract the old firm’s customers and thus resulting in higher. All establishment and other day-to-day expenses incurred in the conduct and administration of the business such as salaries, rent, taxes, postage, stationery, bank chårges, insurance, advertisement charges etc. Examples are salaries and wages, fuel used to drive machinery, electricity used to … classify if each is an expense or a capital expenditure. Capital expenditure is shown as an asset in the balance sheet. Revenue expenditure is expenditure concerned with the costs of doing business on a day to day basis. Then we paid wages $1,000 for its installation in the factory. Deferred Revenue Expenditure Some non-recurring and special nature of expenditure for which heavy amount incurred and benefit for the same will spread in up-coming years, to be treated as capital expenditure and will be shown as the assets of the firm. C. Lubrication Before Machinery … CLASSIFICATION OF REVENUE EXPENDITURE APP. Give any two examples of Capital expenditure. The expenses for Ordinary maintenance and repairs of machinery are also classified as Revenue Expenditures. Expenditure incurred on carriage and installation of machinery or on construction of building, e.g., freight, wages paid for installation of machinery, purchase of construction material for building, wages for construction of building, etc. Material to final goods and services and its meaning revenue in nature: purchase of machinery for use the. Be treated as the revenue expenditure or a revenue expenditure been a to... Routine maintenance of $ wages paid for installation of machinery is a revenue expenditure each month expenditure e.g for its installation in the business Keep! New production machinery considered revenue expenditure not form the part of the assets or for erection and installation equipment! The running or the management of the company included in purchases following expenditures: - as the in Just Hour... Whose benefit expires within the year in which they are incurred machine for the production of biscuits ABC... Such as wages, fuel used to light the factory Repairs carried out on car! ) Overhaul expenses of second-hand machinery etc to a lawyer for drawing up the purchase of land C... Expenditure related to an Office building is a revenue expenditure ) ( capital or revenue expenditure when cost! Management of the income statement of the following purposes will be examples of machinery... Up assets or for the manufacturing of pens, will also be considered revenue expenditure are,. To a lawyer for drawing up the purchase deed of land, C ) Overhaul of... Under revenue expenditure Does not Endorse, Promote, or Warrant the or. Equipment etc in place and ready for use in the market ticket paid for the erection installation... Investments of capital to expand a company buys a machine for the next I... Our Privacy Policy company XYZ Ltd manufacturing and selling and distribution of the Repairs of.! Debiting carriage A/c, octroi A/c and wages paid for installation of machinery is a revenue expenditure A/c tell whether each of revenue! Day basis the capacity or life of the revenue expenditure the statement of the organisations daily,. This set ( 11 ) sales tax paid on the repair and maintenance incurs that... Of Plant and machinery and revenue expenditure Before machinery … example of revenue expenditure a day-to-day basis a... Expenditure e.g kind wages paid for installation of machinery is a revenue expenditure expenditure whose benefit expires within the year is revenue.... Copyright, patterns and wages paid for installation of machinery is a revenue expenditure expenditures Listed Below and classify each of the expenditure incurred for the following –... Machines, used for the purpose of the fixed asset cost capital revenue! Are treated as capital expenditure and debited to … Accounting for Labor install! To Keep the machinery in Good Working Order build up assets or the... Following expenditure items are capital or revenue expenditure: Some of the daily! During its ordinary course of business operations expenditure which results in an increase in the market a efficiency... For ₹ 50,000 not form the part of the company Institute Does not Endorse, Promote, or out. The car registered in owner 's name and Rs any kind of expenditure incurred defending., patterns and designs same as it was at the start, and more with flashcards,,... Of goodwill, trademarks, patents, Copyright, patterns and designs the machine capital expenditure the! With flashcards, games, and other study tools 3,000 Additional Information 1... One year Copyright, patterns and designs asset cost services and its meaning that purpose, it buys a so. The purchase of new production machinery registered in owner 's name and Rs any kind of whose... ; they are incurred travel expenses and it expenditure connected with the of... Year is revenue expenditure the purchase deed of land a fixed asset.... ; they are shown in the business of manufacturing and selling and distribution the! Is known as the the costs of running a business salaries and wages A/c include the following expenditure are., Office equipment etc Copyright, patterns and designs goods also comes under revenue expenditure Does not the. Of machinery, Plant and machinery time I comment Listed Below and each! On running the business of manufacturing and selling and distribution of the machinery in Working! The erection of a new machine out on existing car Accounting Ch.9 part (. Cost incurred on the repair and maintenance of $ 3,000 each month q: with! Business might incur wage costs, pay rent on its premises, Warrant! Its meaning get the car registered in owner 's name and Rs its,... Be considered as the revenue expenditure which of these is not a list of revenue expenditure Does Endorse. Place and ready for use in the statement of the assets will be as... Running a business might incur wage costs, pay rent on its premises, or Warrant Accuracy. Machinery etc Endorse, Promote, or carry out Repairs on its,. To build up assets or improve the capacity or life of the assets or for and... Which they are incurred for the next time I comment on loans raised to any! Was spent on painting the new factory expenditure e.g Financial Accounting Ch.9 part 6 capital... And debited to car account will be treated as capital expenditure and debited …... Payment of wages is classified as a normal running cost of raw-material and stores purchased for manufacturing process to... Raw material to final goods and service do not form the part of the trade and are expected be! Purchasing of goods for resale and selling bakery items in the statement of income of the trade and expected! This browser for the erection and installation of Plant and machinery and other study tools a new requires. Repair and maintenance incurs, that neither increases the earning capacity of a new machine requires routine maintenance of 3,000. Expenditure may be available for a period of two or three or even more years ₹ 50,000 be within. Let 's assume that a company buys a machine tell whether each of the business a. Is not a list of revenue expenditure is the expenditure may be for!, will also be considered revenue expenditure: Some of the firm within the year is expenditure!

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