Which of the following should not be treated as revenue expenditure?
Correct answer: C. Sales tax paid in connection with the purchase of office equipment
- A. Interest on loans and debentures
- B. Annual fire insurance premiums on Plant and Equipment
- C. Sales tax paid in connection with the purchase of office equipment
- D. Small expenditures on long- lived assets, such as ` 20 for a paper weight.
Explanation
Sales tax paid to acquire office equipment is directly attributable to its purchase and forms part of the equipment's capital cost. Interest, insurance and immaterial small items are generally charged as revenue expenditure in this context.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
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.
Practise Accounting Principles
351 free Accounting Principles MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Accounting Principles questions
Capital expenditure is an expenditure which
Which of the following is not a deferred revenue expenditure?
Any donation received for a specific purpose is a_________?
Which of the following errors affects the agreement of a Trial Balance?
The accountant of Leo Ltd. recorded a payment by cheque to a creditor for supply of materials as 1,340.56. The bank recorded the cheque at its correct amount of 3,140.56. The Company has not passed any rectification entries and the error is not detected through the bank reconciliation. The impact of this error is
Purchase journal is kept to record_____________?