Day: November 5, 2019

The depreciation charge shown in the profit and loss account . . .

Select ONE answer:

1. is a revenue expense.
2. is capital expenditure.
3. can be either capital expenditure or a revenue expense, depending on the nature of the fixed asset being depreciated.
4. none of the above.

Show your workings to arrive at your answer, and explain and justify your reasons:

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This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. If the depreciation charge was capital expenditure it would be shown as an increase in fixed assets in the balance sheet – not as an expense in the profit and loss account.

 

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