a) Explain what is meant by ‘capital expenditure’ and by ‘revenue expenditure’ and how each is treated in the financial records of a company. (b) So
(a) Explain what is meant by ‘capital expenditure’ and by ‘revenue expenditure’ and how each is treated in the financial records of a company.
(b) Some of the following items should be treated as capital and some as revenue.
For each of them state which classification applies:
(i) The purchase of machinery for use in the business.
(ii) Carriage paid to bring the machinery in (i) above to the works.
(iii) Complete redecoration of the premises at a cost of $1,500.
(iv) A quarterly account for heating.
(v) The purchase of a soft drinks vending machine for the canteen with a stock of soft drinks.
(vi) Wages paid by a building contractor to his own workmen for the erection of an office in the builder’s stockyard.
![](/static/compass_v2/shared-icons/check-mark.png)
Step by step
Solved in 3 steps with 1 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)