Question : Which of the following statements are true?
Statement 1- Capital expenditure neither reduces a liability nor creates an asset.
Statement 2- Flyovers, purchase of machines are the part of capital expenditure.
Option 1: Both are true .
Option 2: Both are false
Option 3: Statement 1 is true and statement 2 is false.
Option 4: Statement 2 is true and statement 1 is false.
Correct Answer: Statement 2 is true and statement 1 is false.
Solution : Capital expenditure reduces a liability or creates an asset. Flyovers, purchase of machines are the part of capital expenditure. Hence option D is correct.
Statement-1 An expenditure is revenue expenditure, if it either creates an asset or reduces a liability.
Statement-2 An expenditure is a capital expenditure, if it neither creates an asset nor reduces any
Question :
Statement 1- Payment of salaries, health services are the part of capital expenditure.
Statement 2- Revenue expenditure do not create any asset.
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile