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Question=Mr. Ali has started a new business in current year 2011. For his business, he has purchased a building, office furniture and fixtures. He has paid insurance premium of the building for the financial year 2011 and also incurred the advertisement expenses. Transportation charges have also been paid for the furniture he purchased. Salaries have also been paid during the year. Along with all these activities, Mr. Ali has purchased a car for his personal use only.

Required:
Identify at least two capital and two revenue expenditures from the above given scenario???

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Please Discuss here about this GDB.Thanks

 

Dear Tariq bhai, the GDB instruction say the fond should be Times new roman and size 12, but where you post the comments within LMS the maximum font size 6. What to please reply.

Answer: Two Capital of Mr. Ali business is 
1=Building 
2=Furniture 
Because Assets =Capital 
And two Revenue Expenditures is 
1=Transport charges which had paid for furniture
2=Salaries paid during the year to employee 
Because Expenses that provide benefit immediately are called ""Revenue Expenditure"

Transportation Charges is also capital charges because the expenses that accrue to accomdate te assets are also capital charges.

Transportation charges provide benefits immediately, that's why it is revenue expenses.

For further details, see the attachment

Attachments:

thanks for guidance...

 

IT is clearly written in ur pdf file freight and carriage paid on merchandise purchased  is revenue expenditure

it clears everything thanks for the file

Capital Expenditures are;

  • Building
  • Office Furniture
  • Cars for personal use

Revenue Expenditures are;

  • Advertisement expenses
  • Insurance premium
  • Transportation charges
  • Salaries paid

capital wo hota ha jo kis fix asset ko purchase karnay k lya invest ho .transportation charge be furniture ko purchase karnay k lyainvest howy hain pher ya kasay expenditure ho sakta ha ya capital ho ga i think.whats ur opinion?

 

freight and carriage paid on merchandise purchased  is revenue expenditure



You are right. I have said already that transportation is also Capital Charges. any expenses that accrued to bring and maintain the assets are also Capital ezpenditures.

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