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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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Replies to This Discussion

freight and carriage paid on merchandise purchased  is revenue expenditure



freight and carriage paid on merchandise purchased is revenue expenditure. but my dear merchandise means products or goods. and Furnitures is not ant product or goods that used to production. so the Charges for Furnitures is also Capital Expenses it is so simple. Watch the Lecture 5.

Dear Naveed Ahmed, if you own a dictionary you can  see the meaning of goods and merchandise.My 8th edition oxford says ( goods: things that are produced to be sold) then how can you say furniture is not in the category of goods. here is an online dictionary link chk it

http://legal-dictionary.thefreedictionary.com/goods

http://legal-dictionary.thefreedictionary.com/merchandise

and next time it would be better that u justify the point. i did not found it cool when u put a smiley and said watch the lecture 5 like u were saying i am dumb or without a brain.

 

"paid insurance premium of the building for the financial year 2011" what is this capital or revenue?

Capital expenditures are:

1. Office furniture and fixtures
2. cost of car

Revenue expenditures are:

1. Salaries
2. Insurance premium
3. Transportation charges
4. Advertisement expenses

salaam Capital expenditures are:

1. Office furniture and fixtures
2. cost of car

Revenue expenditures are:

1. Salaries
2. Insurance premium
3. Transportation charges
4. Advertisement expenses


is this correct sol??????????????????????????

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