Question

4. Classify the following into: (a) capital expenditure; (b) revenue expenditure; (c) capital receipts; (d) revenue receipts:
(i) Purchase of land (ii) Purchase of motor vehicle (iii) Rent received (iv) Repairs to motor vehicle (v) Fuel cost for running the vehicle previously bought (vi) Sale of land previously bought (vii) Interest on loan to purchase land (viii) Wages of cleaner (ix) Payments for carriage inwards on machine bought (x) Installation cost of machine (xi) Cost of repairs to a factory building (xii) Cost of papers used in the accounts department (xiii) Proceeds from disposal of motor vehicle (xiv) Commission received from a transaction (xv) Legal fees paid in buying land.

Accepted Answer

(a) Capital expenditure: (i) Purchase of land; (ii) Purchase of motor vehicle; (ix) Payments for carriage inwards on machine bought; (x) Installation cost of machine; (xv) Legal fees paid in buying land.

(b) Revenue expenditure: (iv) Repairs to motor vehicle; (v) Fuel cost for running the vehicle; (vii) Interest on loan to purchase land; (viii) Wages of cleaner; (xi) Cost of repairs to a factory building; (xii) Cost of papers used in the accounts department.

(c) Capital receipts: (vi) Sale of land previously bought; (xiii) Proceeds from disposal of motor vehicle.

(d) Revenue receipts: (iii) Rent received; (xiv) Commission received from a transaction.

WAEC Accounting 2014 Theory — Question 7

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