lec 3 prt 3 cap rev expenditure sum

Question 1

what company spends money on determines whether it goes to

Answer 1

assets in BS or expenses in income statement

Question 2

what is revenue expenditure

Answer 2

spending on D2D operating expenses - all spending but purchases of NCA and to improve NCA

Question 3

what is capital expenditure

Answer 3

purchase of NCA (including cost of getting it operational at outset) and cost of improvement

Question 4

improvement of NCA is not equal to

Answer 4

maintaining and restoring NCA

Question 5

Why is imporvment of NCA not equal to maintaining and restoring NCA

Answer 5

Improvement increases value of asset

maintaining and restoring keeps value of asset the same and keeps it in service

Question 6

revenue expenditure is treated as an

Answer 6

expense

Question 7

capital expenditure is treated as an

Answer 7

asset

Question 8

why dont we carry on profit/loss of the previous period into this period

Answer 8

becasue income statement only reflects profit earned for a particuar period

Question 9

if asked to calculate vehicle expenses accoutn what are we looking at in terms of types of expenditure

Answer 9

reveneu expenditure

Question 10

when deciding whether something is a rev or capital expenditure what 3 things should run through our minds

Answer 10

is it a purchase of a NCA

is it improving a NCA

Is it cost of getting it operational at outset
- capital expenditure

is it a day to day expense/maintaining
- revenue expenditure

Question 11

when we say vehicle expenses account how do you know were beign asked to find rev expenduture

and how would we know it is capital

Answer 11

says expensnes indicatinf p and l

if it were capital expenditure - would just say vehicle account as its an asset