CAPTIAL AND REVENUE EXPENDITURE
1. Which of the following expenses should not be treated as capital expenditure? a) Expenses paid on installation of a plant. b) Cost of dismantling a building in case a new building is to be constructed on the land c) Legal expenses incurred to defend a suit related to title of patent. The suit has been lost d) The fees paid to engineer who constructed the plant.
2. Which of the following is not a revenue expense? a) Cost of raising a loan b) Cost of accessories of motor vehicles spent at the time of purchase c) Expenses incurred for laying of sewers on land purchased d) Insurance premium paid at the time of registration of the ship
3. Depreciation does not arise form _______ a) effluxion of time b) use c) obsolescence through technology be market changes d) remarket expectation
4. Which of the following Schedule of the Companies Act, 1956 deals with depreciations? a) Schedule XIV b) Schedule V c) Schedule XIII d) Schedule X
5. Schedule XIV has prescribed rates of depreciation for double shift and triple shift working for which one of the following assets? a) Building b) Plant and Machinery c) Furniture and fittings d) Ships
6. If the book value of an asset stands at ........per cent of the original cost, a company need not provide depreciation on it. a) two b) fifteen c) five d) ten
7. A company has bought patents. Which of the following methods is most suitable for providing depreciation on them? a) SLM b) WDV c) Sumof year digits d) Any of the above
8. Which of the following is a revenue reserve? a) Capital redemption reserve b) Security premium account c) Debenture redemption reserve d) Capital reserve
9. Which of the following will not lead to creation of secret reserve? a) Undervaluation of closing stock b) Charging capital expenditure to revenue c) Goods sent on consignment being shown as actual sales d) Charging higher rates of depreciation on fixed assets than actually required