Write with reasons whether the following payments are capital or revenue apurchased computer for rs 120000 bpurchased ststionery for rs 12000 cpurchaesd a godrej table for rs 40000 e0 paid salaries to?

Answer 1

Capital expenditures are those whose benefits can be reaped for a period beyond one year whereas the benefits of revenue expenditures are for a shorter period. a) Capital b) Revenue c) Capital d) Revenue

Answer 2

a) The purchase of a computer for Rs 120,000 is a capital expenditure because it is a long-term asset that will provide benefits to the business beyond the current accounting period. b) The purchase of stationery for Rs 12,000 is a revenue expenditure as it is a routine operational expense needed for day-to-day activities and does not provide long-term benefits. c) The purchase of a Godrej table for Rs 40,000 is a capital expenditure as it is a tangible asset that will be used over multiple accounting periods and provide long-term value to the business. d) Salaries paid to employees are considered a revenue expenditure as they are a necessary cost to operate the business and are incurred regularly for the services provided by employees.