Which item is normally treated as a capital expenditure rather than an ordinary revenue expense?
Correct answer: A. Purchase of machinery for long-term business use
- A. Purchase of machinery for long-term business use
- B. Payment of monthly office electricity
- C. Purchase of stationery for immediate use
- D. Payment of routine equipment repairs
Explanation
Machinery acquired for continuing business use creates or improves a long-term asset and is therefore capital in nature. Electricity, stationery and routine repairs are normally revenue expenses when incurred for business operations.
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About Taxation
Taxation covers the principles used to assess and collect taxes from individuals, businesses and transactions, with emphasis on income tax and sales tax concepts in Pakistan. Questions involve taxable income, exemptions, deductions, tax liability, withholding, returns, assessment, tax avoidance versus evasion, and the distinction between direct and indirect taxes.
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