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.
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