Question
Download Solution PDFThe amount spent to increase the earning capacity of a business is:
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is Capital Expenditure
Key Points Capital Expenditure:
- Capital Expenditure refers to that expenditure which is incurred for acquiring fixed assets or assets which increase the earning capacity of the business.
- The benefits of capital expenditure extend to the number of years.
- Examples: Expenditure incurred for acquiring a fixed asset such as building, plant, and machinery, etc.
Additional Information
Deferred revenue expenditure: It refers to those expenses which are incurred during one accounting year, but benefits from the same are available wholly or in part in future periods also. Example: heavy expenditure on an advertisement, expenditure incurred on research and development, etc.
Last updated on May 6, 2025
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