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By Accounting Mcqs 3 Comments

Which of the following is not a deferred revenue expenditure?

A. Expenses in connection with issue of equity shares
B. Preoperative expenses
C. Heavy advertising expenses to introduce a new product
D. Legal expenses incurred in defending a suit for breach of contract to supply goods

D. Deferred revenue expenditure is a revenue expenditure whose benefit lasts for more than one accounting periods and is therefore written off during the periods over which the benefit lasts(However, AS 26 requires that Deferred revenue expenditure is expenses wholly in the year of incurrence). Legal expenses incurred in defending a suit for breach of contract for supply of goods does not satisfy the prerequisites of a deferred revenue expenditure.

Related Mcqs:

  1. Capital expenditure is an expenditure which

    A. Benefits the current accounting period
    B. Will benefit the next accounting period
    C. Results in the acquisition of a permanent asset
    D. Results in the acquisition of a current asset

  2. Which of these types of expenditure would not be treated as a Capital Expenditure?

    A. Acquisition of an Asset
    B. Extension of an Asset
    C. Improvement of the existing Asset
    D. Maintenance of the Asset

  3. Which of the following should not be treated as revenue expenditure?

    A. Interest on loans and debentures
    B. Annual fire insurance premiums on Plant and Equipment
    C. Sales tax paid in connection with the purchase of office equipment
    D. Small expenditures on long- lived assets, such as ` 20 for a paper weight.

  4. Which one of the following should be considered a revenue expenditure?

    A. 1000 paid for the execution of a new plant
    B. Loss of 10,000 incurred in increasing the sitting accommodation of a hotel
    C. Damage paid on account of breach of a contract to supply certain goods
    D. Repair to machinery purchased, second hand.

  5. Which of the following is an item of capital expenditure?

    A. Research and development costs during the year
    B. Interest on borrowed fund utilized for acquisition of Office Furniture
    C. Installation charges paid in conjunction with the purchase of Office Equipment
    D. Monthly rent of a machinery used in the business

  6. Which one of the following is a capital expenditure?

    A. Compensation paid to Directors on termination of their services
    B. Expenditure incurred in connection with the renewal of a Trade Mark.
    C. Gratuities paid to Directors on termination of their services.
    D. Royalty paid in installments for the purchase of rights to manufacture and sell patient medicines.

  7. Which of the following is a capital expenditure?

    A. Repair of plant and machinery
    B. Salary paid to workers
    C. Cost of stand by equipment
    D. Annual whitewash of the office building

  8. Which of the following methods is not a practical way of realizing revenue?

    A. Delivery method
    B. Percentage-of-completion method
    C. Production method
    D. Moving average method

  9. Which of the following is a revenue expenses?

    A. Raw material consumed
    B. Plant purchased
    C. Long term loan raised from bank
    D. Share Capital

  10. Expenses of the following nature are treated as a Revenue expenses except__________?

    A. Expenses for day to day running of the business
    B. Putting the new asset in working condition
    C. Depreciation
    D. Purchase of raw material

The correct answer to the question: "Which of the following is not a deferred revenue expenditure?" is "Legal expenses incurred in defending a suit for breach of contract to supply goods".

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