Day: November 30, 2019

Which of the following is capital expenditure?

Select ONE answer:

1. The cost of repairing a vehicle.
2. The cost of acquiring a vehicle for re-sale.
3. Proceeds arising from the sale of a van that had been used in the business to make deliveries to customers.
4. The cost of a new vehicle acquired for continuing use in the business.

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 4

1. Not correct – The cost of repairing a vehicle is revenue expenditure.
2. Not correct – The cost of acquiring a vehicle for re-sale (a purchase) is revenue expenditure.
3. Not correct – Proceeds arising from the sale of a van that had been used in the business to make deliveries to customers is a capital receipt.
4. Correct

 

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