Chapter 10, Problem 2QC

To determine

Classification of Expenditure:

For recording any expenses in books of account first it has to be classified into:

Capital Expenditure:

It is any expenditure incurred or spent for acquisition of any fixed assets like land, building and office equipment.

Revenue Expenditure:

It is any expenditure incurred or spent thereby matching the revenue of the accounting or reporting period such as rent, repairs and salaries.

To indicate:

Journal entry for recording a capital expenditure.