Capital And Revenue Expenditure - Quiz 1

Capital and Revenue Expenditure is the Seventh Unit (Unit 7) under Module A: Accounting Principles and Processes of Paper – III (Accounting & Financial Management for Bankers)

If you are appearing for the Upcoming JAIIB Exams, it is important to understand the fundamental concepts of the Topics and clear your doubts. We have prepare and collected some fundamental questions and answers in the form of MCQ Questions and Answers arranged into multiple Quizzes having 10 Questions in each Quiz. It can help you to understand the topics. A solid fundamental understanding will build your confidence and encourage you to think critically and enables you to answer the JAIIB Questions correctly in the Exam and increase your chances to pass the exam with flying colors. It is advisable to practice these Questions and Answers on regular basis to raise your confidence Level.

Practice MCQ Question and Answer – Capital and Revenue Expenditure

Quiz 1

1. What does expenditure refer to ?

The process of causing a liability by a commodity
The process of causing an asset to increase in value
The process of increasing profit
The process of reducing liabilities

(a) Only (I)
(b) (I) and (II)
(c) (III) and (IV)
(d) (I), (II), (III) and (IV)
….
Answer is (a)
The process of causing a liability by a commodity

2. What records keep track of expenditures ?

(a) Receipts and invoices
(b) Ledger and trial balance
(c) Balance sheet and income statement
(d) Cash flow statement and budget report
….
Answer is (a)
Receipts and invoices

3. Which costs are classified as capital expenditure ?

Initial costs
Subsequent costs
Maintenance expenses
Repair costs

(a) Only (I)
(b) (I) and (II)
(c) (I), (II) and (III)
(d) (I), (II), (III) and (IV)
….
Answer is (b)
Initial costs and Subsequent costs

4. What is the difference between expenditure and expense ?

(a) Expenditure increases profit, while expense reduces profit.
(b) Expenditure is recorded as an asset, while expense is recorded as a liability
(c) Expenditure denotes obtaining assets, while expense shows a deduction in asset value
Expenditure refers to cash transactions, while expense refers to credit transactions.
….
Answer is (c)
Expenditure denotes obtaining assets, while expense shows a deduction in asset value

5. What are the two types of expenditures based on time durations ?

Short-term and long-term expenditures
Fixed and variable expenditures
Capital expenditures and revenue expenditures
Operational and strategic expenditures

(a) Only (I)
(b) Only (III)
(c) (I) and (III)
(d) (I), (II), (III) and (IV)
….
Answer is (b)
Capital expenditures and revenue expenditures

6. What expenses are considered initial costs in capital expenditure ?

Purchase price including duties and taxes
Costs of routine maintenance
Costs directly attributable to bringing the asset to operational condition
Costs of major inspections for potential faults

(a) (I) and (II)
(b) (II) and (III)
(c) (III) and (IV)
(d) (I) and (III)
….
Answer is (d)
Purchase price including duties and taxes and Costs directly attributable to bringing the asset to operational condition

7. Which of the following is an example of a capital expenditure ?

(a) Rent payments for office space
(b) Purchasing office supplies
(c) Paying utility bills
(d) Buying machinery for a manufacturing plant
….
Answer is (d)
Buying machinery for a manufacturing plant

8. What distinguishes an expense from an expenditure ?

(a) The deduction in the value of the asset
(b) The increase in asset value
(c) The method of payment
(d) The type of commodity purchased
….
Answer is (a)
The deduction in the value of the asset

9. Which costs are categorized as subsequent costs in capital expenditure ?

Costs of parts requiring replacement at regular intervals
Costs of routine maintenance
Repair expenses
Costs of major inspections for potential faults

(a) (I) and (II)
(b) (II) and (III)
(c) (I) and (IV)
(d) (III) and (IV)
….
Answer is (c)
Costs of parts requiring replacement at regular intervals and Costs of major inspections for potential faults

10. Which term refers to spending that results in a decrease in the value of an asset ?

(a) Revenue
(b) Expenditure
(c) Liability
(d) Expense
….
Answer is (d)
Expense

Quiz Numbers

Capital and Revenue Expenditure – Quiz 1

Practice MCQ Question and Answer – Capital and Revenue Expenditure

1. What does expenditure refer to ?

2. What records keep track of expenditures ?

3. Which costs are classified as capital expenditure ?

4. What is the difference between expenditure and expense ?

5. What are the two types of expenditures based on time durations ?

6. What expenses are considered initial costs in capital expenditure ?

7. Which of the following is an example of a capital expenditure ?

8. What distinguishes an expense from an expenditure ?

9. Which costs are categorized as subsequent costs in capital expenditure ?

10. Which term refers to spending that results in a decrease in the value of an asset ?

Read More: MCQ Type Questions and Answers from Paper – III (Accounting & Financial Management for Bankers)

Module A: Accounting Principles and Processes

Module B – Financial Statements and Core Banking Systems

Module C – Financial Management

Module D – Taxation and Fundamentals of Costing