Question:
Rita incurred the following expenditure on various items during the year ended 31st March, 2023. Identify the name/type of expenditure.- (a) Rs. 25,000 paid for the installation of a new machine.
- (b) Repairs of Rs. 5,000 necessitated by negligence.
- (c) Cost of air-conditioning of the office of the General Manager.
Rita incurred the following expenditure on various items during the year ended 31st March, 2023. Identify the name/type of expenditure.
- (a) Rs. 25,000 paid for the installation of a new machine.
- (b) Repairs of Rs. 5,000 necessitated by negligence.
- (c) Cost of air-conditioning of the office of the General Manager.
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Capital expenditures create or improve fixed assets, while revenue expenditures main tain the existing assets without increasing their value.
Updated On: Jan 13, 2026
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Solution and Explanation
Correct Answer:
(a) Capital Expenditure
(b) Revenue Expenditure
(c) Capital Expenditure
Solution:
1. Installation of a new machine: This is Capital Expenditure as it creates a new fixed asset providing long-term benefits.
2. Repairs due to negligence: This is Revenue Expenditure as it is recurring and does not create a new asset.
3. Air-conditioning for the office: This is Capital Expenditure as it improves the value and functionality of the office.
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