Which of the following statement is INCORRECT about capital expenditure?
It maintains the earning capacity of business.
The correct answer is option 1. Capital expenditure is incurred for the acquisition or improvement of long-term assets and maintains the earning capacity of the business over multiple years. It is a non-recurring expenditure, unlike operational or revenue expenditure which occurs regularly.
Important Questions from Capital & Revenue Account
The amount spent to increase the earning capacity of a business is:
Which of the following options DO NOT relate to examples of revenue expenditure?
a) Repair expenses
b) Insurance expense
c) Installation expenses
d) Overhauling expenses of second-hand machinery
Which among the following is a capital receipt?
Which among the following is a capital receipt?
Which of the following statement is INCORRECT about capital expenditure?
