mr jey 11nth march

Question 1

Capital expenditure

Answer 1

Expenditure on the purchase, alteration or improvement of non-current assets

Question 2

LIDIA

Answer 2

Legal costs of buying property
Installation of non-current assets
Delivery of non-current assets
Improvement (but not repair) of non-current assets
As well as the basic cost of non-current assets

Question 3

what can lidia include

Answer 3

It can include wages paid for any of the above, especially installation, delivery and improvement of non-current assets.

Question 4

what can delivery of non-current assets be described as?

Answer 4

carriage

Question 5

Revenue expenditure

Answer 5

expenditure on running costs

Question 6

Example of revenue expenditure

Answer 6

Purchases, advertising, rent & rates, light & heat, wages, telephone, insurance, motor expenses and any other running costs, including the maintenance and repair of non-current assets

Question 7

Where is revenue expenditure in income statement

Answer 7

Cost of Sales

Question 8

Capital Income

Answer 8

any income arising from the sale of non-current assets, income from a loan or capital received from the owner(s) of a business

Question 9

Revenue income

Answer 9

sales revenue from providing goods or services or other revenue such as interest received, rent received and commission received

Question 10

straight line method

Answer 10

The annual amount of depreciation
= (Cost – expected residual value) ÷ Expected years of useful life

Question 11

reducing balance method

Answer 11

The annual amount of depreciation
= Percentage x Net Book Value

Question 12

net book value

Answer 12

Cost – Accumulated depreciation
If an asset is new, it is that percentage of its cost.

Question 13

Accumulated depreciation may also be called

Answer 13

Provision for depreciation

Question 14

Debit

Answer 14

depreciation

Question 15

Credit

Answer 15

Accumulated depreciation

Question 16

Disposal proceeds

Answer 16

how much the asset was sold for

Question 17

Net book value

Answer 17

Cost - Accumulated depreciation when it is sold

Question 18

Profit or loss on disposal of non-current assets is equal to:

Answer 18

Disposal proceeds – Net book value

Question 19

If this figure is negative (net book value greater than disposal proceeds)

Answer 19

the ‘Loss on Disposal’ is treated as an expense on the income statement

Question 20

If this figure is positive (disposal proceeds greater than the net book value)

Answer 20

the ‘Profit on Disposal’ is shown as income after gross profit on the income statement