Financial Accounting ICOM Part 01 Top 500 + MCQS Download Pdf Chapter No 14

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Chapter – 14

Capital and Revenue

Encircle the most appropriate answer from following :


1.The amount invested by the owner in the business to produce revenue is known as

  1. Asset
  2. Capital
  3. Liability
  4. Income

2. It is the price of goods sold or services provided by a business to its customers:

  1. a. Cost
  2. c. Capital
  3. b. Asset
  4. d.Revenue\

3.The transactions, the effect of which is not exhausted within the current accounting year are called:

  1. Capital transactions
  2. Monetary transactions
  3. Revenue transactions
  4. Current transactions

4. Transactions, having short-term effects are known as:

  1. Capital transactions
  2. Paper transactions
  3. Revenue transactions
  4. Non-monetary transactions

5. An expenditure, which is non-recurring and irregular, is called:

  1. Capital expenditure
  2. Revenue expenditure
  3. Short-term expenditure
  4. Current expenditure

6.An expenditure, which is incurred to increase the profit earning capacity of a business concern, is called

  1. Deferred expenditure
  2. Capital expenditure
  3. Revenue expenditure
  4. Recurring expenditure

7.Wages paid for the construction of a building is an example of

  1. Deferred expenditure
  2. Capital expenditure
  3. Revenue expenditure
  4. Recurring expenditure

8.An expenditure, which is completely exhausted within the current accounting period is known as a.

  1. Deferred expenditure
  2. Future expenditure
  3. Revenue expenditure
  4. Recurring expenditure

9.An expenditure, which is temporarily increase the profit making capacity of the business is called

  1. Capital expenditure
  2. Short-term expenditure
  3. Revenue expenditure
  4. Non-recurring expenditure

10. Expenditure is a capital expenditure because

  1.  The amount involved is heavy
  2. It is the personal expenditure of the owner out of his capital
  3. It is intended to benefit the future period
  4. It is a recurring expenditure

11. Expenditure is revenue expenditure because

  1. It is intended to benefit the current period
  2. The amount involved is small
  3. It is deducted from the gross sale proceeds
  4. None of these

12. Expenditure, which helps to maintain the business efficiency is called

  1. Revenue expenditure
  2. Capital expenditure
  3. Deferred expenditure
  4. Non-recurring expenditure

13. Which one of the following is appeared in the balance sheet:

  1. Capital expenditure
  2. Revenue expenditure
  3. Deferred expenditure
  4. Both 1 & 3

14. Depreciation of fixed assets used in the business is an example of

  1. Capital expenditure
  2. Deferred expenditure
  3. Revenue expenditure
  4. None of these

15. All revenue expenditures are taken to

  1. Trading & Profit or Loss a/c
  2. Balance sheet
  3. Trading a/c
  4. Profit or Loss a/c

16. An expenditure, incurred to improve the position of the business is known as

  1. Deferred expenditure
  2. Capital expenditure
  3. Revenue expenditure
  4. Recurring expenditure

17. Bad debts are:

  1. Capital expenditures
  2. None of these
  3. Revenue expenditures
  4. Deferred expenditures

18. Octroi duty paid on machinery, is an example of a.

Recurring expenditure

Revenue expenditure

Capital expenditure

Both 1&2


19. Cost of redecorating a cinema hall is a.

  1. Capital loss
  2. Capital expenditure
  3. revenue expenditure
  4. None of these

20. A revenue expenditure, the benefit of which is not confined to one accounting year is called

  1. Revenue expenditure
  2. Deferred expenditure
  3. Non-current expenditure
  4. Future expenditure

21. An expenditure, which increases the utility or productive capacity of an asset is treated as

  1. Capital expenditure
  2. Revenue expenditure
  3. Deferred expenditure
  4. None of these

22. Heavy expenditure on advertisement for making a new product is a

  1. Revenue expenditure
  2. Capital loss
  3. Deferred expenditure
  4. Non recurring expenditure

23. Distinction between capital and revenue items is important for the preparation

Trading and Profit or Loss a/c

Balance sheet

Deferred expenditure

Both 1&2


24. Capitalized expenditures are shown in

  1. Profit or Loss a/c
  2. Trading alc
  3. Income statement
  4. Balance sheet

25. Preliminary expenses paid in the formation of a company is a

  1. Deferred expenditure
  2. Capital expenditure
  3. Revenue expenditure
  4. Capital loss

26. An expenditure incurred to keep the activities of a concern going on is:

  1. Future expenditure
  2. Capital expenditure
  3. Revenue expenditure
  4. None of these

27. Receipts, which are non-recurring by nature, are called

  1. Revenue receipts
  2. Current receipts
  3. Capital receipts
  4. Capital profits

28. A receipt is a revenue receipt because

  1. The amount is small
  2. It is received in the accounting year
  3. It relates to routine activity of the business
  4. None of these

29. A receipt is a capital receipt because:

It is credited to capital account

  1. The amount is heavy
  2. It is intended to benefit the future period
  3. It relates to fixed assets
  4. It is intended to benefit the future

30. Capital receipts are shown in the balance sheet on the

  1. Asset side
  2. Debit side
  3. Liability side
  4. None of these

31. Revenue receipts are shown in

  1. Profit and Loss a/c (debit) side
  2. Balance sheet (debit) side
  3. Profit & loss a/c (credit) side
  4. Trading a/c debit side

32 A profit, which is earned on the sale of a fixed asset, is called

  1. Revenue profit
  2. Gross profit
  3. None of these
  4. Capital profit

33. The profit that is camed during the ordinary course of business is regarded as

  1. Revenue profit
  2. Deferred profit
  3. Capital profit
  4. None of these

34. Capital profit should be transferred to

  1. Balance sheet
  2. Profit and Loss a/c
  3. Trading alc
  4. None of these

35. The loss incurred on raising capital of a joint stock company is called as

  1. Capital loss
  2. Normal loss
  3. Revenue loss
  4. Capital reserve

36. Capital loss is shown in balance sheet on

  1. Asset side
  2. Liability side
  3. Both 1&2
  4. Credit side

37. Loss on sale of goods is an

  1. Capital loss
  2. Revenue payment
  3. Revenue loss
  4. Deferred loss

38. A loss is a revenue loss because

  1. It is incurred to decrease the tax liability
  2. It is related to current assets
  3. It arises due to normal reasons
  4. None of these

39. A loss is a capital loss because

  1. It arises due to abnormal reasons
  2. It relates to fixed asset
  3. All of these
  4. It is another name given to drawings out of capital

40. Rs. 1000 paid as wages for erecting a machine should be debited to

  1. Wages alc
  2. None of these
  3. Cash a/c
  4. Machinery a/c

41. A payment is a capital in nature when

  1. It arises due to abnormal reasons
  2. The amount is heavy
  3. It relates to capital expenditures

None of these