Capital and revenue expenditure and receipts

At the point when Mark set up a car repair business, he bought premises and equipment. Two years later, he paid $5000$ to construct an extension, $600$ for additional equipment and $750$ to repaint the original premises. By what amount will the non-current assets rise as a result of these transactions?

Feb/March 2020

A business supplied the information below about two expenses. Which amounts will be recorded in the income statement for the year ended 31 December 2019?

Feb/March 2020

When a new machine was bought, the following payments were made: Price of the machine $32 000; delivery charge for the machine $1 800; insurance for the machine $2 000; wages paid to employees installing the machine $1 300. What was the capital expenditure?

Feb/March 2023

Once his financial statements had been prepared, a trader found these mistakes: 1. A revenue receipt of $1000 was entered as a capital receipt. 2. Capital expenditure of $800 was entered as revenue expenditure. 3. A capital receipt of $900 was entered as a revenue receipt. What was the net impact of these errors on the profit for the year?

Feb/March 2024

Paul worked out his profit for the year as $\$40\,000$. He later found these errors: • The expenses included rates prepaid, $\$1000$, for the next year. • Electricity owed of $\$600$ had been left out. • Sales returns worth $\$10\,000$ were not recorded. What was the correct profit for the year?

Feb/March 2025

Which item would be classed as a revenue receipt?

Feb/March 2025

What happens if an item of capital expenditure is treated as revenue expenditure?

May/June 2021

Which statements concerning capital expenditure are correct?

May/June 2021

Which statements concerning capital expenditure are correct?

May/June 2021

John paid the following amounts when he bought a machine. purchase of machine $10000$ delivery charge $1200$ insurance $800$ installation charge $900$ pre-paid maintenance charge $400$ How much ought to have been debited to the machinery account?

May/June 2022

On 1 January, Zac recorded the cost of repairing equipment, $420$, in the equipment account. At 31 December, depreciation at $20\%$ per annum, applied by the straight-line method, was charged against the balance in the equipment account. What effect did this have overall on the book value of the equipment on 31 December?

May/June 2022

For the year ended 31 March 2022, Maria’s draft income statement reported a profit for the year of $38750. A $4800 bank loan at $5\%$ was obtained by Maria on 31 December 2021, but it was wrongly recorded as a revenue receipt. Also, the draft income statement for the year ended 31 March 2022 mistakenly included interest for a full year on the bank loan. What should the correct profit for the year ended 31 March 2022 be?

May/June 2022

Maria’s draft income statement for the year ended 31 March 2022 reported a profit for the year of \$38 750. On 31 December 2021, Maria obtained a 5% bank loan of \$4800, but this was wrongly recorded as a revenue receipt. Through an error, interest for a full year on the bank loan was included in the draft income statement for the year ended 31 March 2022. What was the correct profit for the year ended 31 March 2022?

May/June 2022

A trader’s spending over the year consists of the following amounts: - redecoration of premises: $5000 - insurance of motor vehicles: $2000 - purchase of machinery: $10000 What amount should the trader record in her income statement for the year?

May/June 2023

Ted, who is a manufacturer, bought a machine on credit from T Limited. In what way would Ted have recorded this?

May/June 2023

A wholesaler recorded these transactions: • goods worth $30000 were sold on credit • a cheque for $12000 was received from the sale of old fixtures at book value How should these amounts be classified?

May/June 2023

A trader posted the cost of fixing office equipment to the office equipment account as a debit. What effect did this error have on the financial statements?

May/June 2023

A wholesaler carried out the following transactions: - goods were sold on credit for $30\,000$ - a cheque for $12\,000$ was received from the sale of old fixtures at book value How should these amounts be classified?

May/June 2023

A trader entered the cost of repairing office equipment on the debit side of the office equipment account. What effect did this mistake have on the financial statements?

May/June 2023

A trader settles her insurance premium on 1 January every year, covering the next 12 months. Her insurance payments were as follows: - 1 January 2022: $1680$ - 1 January 2023: $1920$ How much did the trader record for insurance in her income statement for the year ended 31 March 2023?

May/June 2023

Samir operates a car hire business. He took cash payments for car hire. He also obtained the proceeds from selling an old vehicle. What kind of receipts were these?

May/June 2024

A trader maintains the following ledger account (heat and light account). What does the balance on 1 January, year 2 indicate?

May/June 2024

Trevor drew up his financial statements for the year ending 31 December 2020. He later realised that he had failed to enter a cash payment of $240 for insurance covering the 12 months ending 30 November 2021. What effect did this error have on his statement of financial position?

May/June 2024

The cost of repairing machinery was posted to the debit side of the machinery account. What effect did this error have?

May/June 2024

The machinery account was debited with the cost of repairing the machinery. What effect did this error have?

May/June 2024

Jameel’s financial year comes to an end on 31 December. On 1 January 2021, he carried forward a debit balance on his stationery account. What does this balance mean?

May/June 2024

What effect does incorrectly classifying expenses as capital expenditure have?

May/June 2025

When Mark set up a car repair business, he bought premises and equipment. Two years later, he paid $5000 to build an extension, $600 for new equipment and $750 to repaint the original premises. What will be the increase in non-current assets from these transactions (ignore depreciation)?

May/June 2025

What is the effect of classifying expenses incorrectly as capital expenditure?

May/June 2025

A trader posted the expense of repairing office equipment to the office equipment account by debiting it. What impact did this mistake have on the financial statements?

Oct/Nov 2020

When Marina started a business, she bought a stapler for the office. She entered this as office expenses instead of office equipment. Which accounting principle did Marina use?

Oct/Nov 2020

A trader entered the cost of repairing office equipment in the office equipment account on the debit side. What effect did this error have on the financial statements?

Oct/Nov 2020

A trader entered the cost of repairing office equipment in the office equipment account. What effect did this mistake have on the financial statements?

Oct/Nov 2020

When Marina started a business, she bought a stapler for the office. She entered this under office expenses instead of office equipment. Which accounting principle did Marina use?

Oct/Nov 2020

Kate worked out her draft profit for the year as $\$28\,400$. She then found these mistakes. 1. The rent prepaid by Kate had been understated by $\$1000$. 2. The closing inventory had been understated by $\$1500$. What is the correct profit for the year?

Oct/Nov 2020

A trader has acquired new business premises. What are examples of capital expenditure?

Oct/Nov 2021

Jas runs a printing business and has recently paid out several expenses connected with her premises.

Oct/Nov 2021

Hamid bought a motor vehicle from a motor manufacturer overseas. Which cost connected with the motor vehicle is capital expenditure?

Oct/Nov 2022

Which transaction counts as capital expenditure?

Oct/Nov 2023

A trader, Karim, buys a new vehicle and pays by cheque. He will use the vehicle to deliver goods to his customers. In what way should Karim enter this transaction in his books?

Oct/Nov 2023

Which transaction counts as capital expenditure?

Oct/Nov 2023

A limited company trades in office equipment. The amounts below were entered in the company’s books of account. What was the total of the company’s capital receipts?

Oct/Nov 2024

On 1 January 2023, Kate spent $400 on a two-year maintenance contract that began on that date. By mistake, this sum was posted to the machinery account. Kate charges depreciation on machinery at $20\%$ per annum. What was the effect of the error on Kate’s profit for the year ended 31 December 2023?

Oct/Nov 2024

Hamid owns a grocery store. He purchased a motor vehicle, $2000, and fuel, $50. These two amounts were both entered in the purchases account by mistake. What impact did this error have on the income statement for the year?

Oct/Nov 2024

A limited company trades in office equipment. The amounts below were entered in the company’s accounting records. 1. cash received from disposal of motor vehicle $6000 2. cash received from issue of shares $9000 3. discount received $8000 4. rent received $5000 What was the total value of the capital receipts of the company?

Oct/Nov 2024

On 1 January 2023, Kate paid $400 for a two-year maintenance contract for her machinery, with cover beginning on that date. By mistake, this sum was posted to the machinery account. Kate charges depreciation on her machinery at $20\%$ per annum. What effect did this error have on Kate’s profit for the year ended 31 December 2023?

Oct/Nov 2024

P Limited is a retail business with a financial year ending on 30 June. Its accounts department is examining some recent capital and revenue expenditure and receipts.

Oct/Nov 2025