Expenses of the following nature are treated as a Revenue expenses except__________?
Correct answer: B. Putting the new asset in working condition
- A. Expenses for day to day running of the business
- B. Putting the new asset in working condition
- C. Depreciation
- D. Purchase of raw material
Explanation
Putting a newly acquired asset into working condition is necessary to bring it to its usable state, so it is added to the asset's cost as capital expenditure. Day-to-day expenses, depreciation, and raw-material purchases are revenue expenses.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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