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Define what is meant by capital expenditure

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Question (a) Explain what is meant by 'capital expenditure' and by 'revenue expenditure' and how each is treated in the financial records of a company.

Question (b) Some of the following items should be treated as capital and some as revenue. For each of them state which classification applies:

(i) The purchase of machinery for use in the business.

(ii) Carriage paid to bring the machinery in (i) above to the works.

(iii) Complete redecoration of the premises at a cost of $1,500.

(iv) A quarterly account for heating.

(v) The purchase of a soft drinks vending machine for the canteen with a stock of soft drinks.

(vi) Wages paid by a building contractor to his own workmen for the erection of an office in the builder's stockyard.

Reference no: EM132595242

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