Question 1

Question No 01 Chapter No 17 - D.K Goal 11 Class

Sarbjit Singh · Accepted Answer

Question No 01 Chapter No 17
1. State with reasons whether the following are capital or revenue expenditure :

A new machinery is purchased Rs 60,000, Rs 800 were spent on its carriage and Rs 1,500 were paid as wages for its installation
A sum of Rs 10,000 was spent on painting the new factory.
Rs 5,000 paid for the erection of a new machine.
Rs 2,000 were spend on repairs before using a second hand generator purchased recently.
Rs 1,500 were spend on the repair of a machinery
Rs 10,000 was pai

Question 2

Question No 02 Chapter No 17 - D.K Goal 11 Class

Sarbjit Singh · Accepted Answer

Question No 02 Chapter No 17
02. State whether the following expenditure are capital, Revenue or Deferred Revenue. Give Reason:

Furniture of book value of Rs 10,000 were sold off at Rs 2,500 and the furniture of the value of Rs 6,000 were acquired, Cartage on purchase Rs 50.
Temporary huts were constructed costing Rs 25,000. these were necessary for the construction of the new building and were demolished when the building was ready
Replacement of old machinery by a new one.
Rs 40,000 were Spe

Question 3

Question No 03 Chapter No 17 - D.K Goal 11 Class

Sarbjit Singh · Accepted Answer

Question No 03 Chapter No 17
03. Classify the following into Capital, revenue and Deferred Revenue expenditure, Stating reasons in each case.

A sum of Rs 32,000 has been spent on a machine as follows: Rs 20,000 for addition to Double the output, (ii) Rs 5,000 for repairs necessitated by negligence and (iii) Rs 7,000 for replacement of worn –out parts
Total expenditure on a cinema building during the year was Rs 2,00,000 out of which 20% related to repair and 80% represented improvement and add

Question 4

Question No 04 Chapter No 17 - D.K Goal 11 Class

Sarbjit Singh · Accepted Answer

Question No 04 Chapter No 17
04. State by Giving reasons whether the following items of Expenditure are capital or Revenue.

Purchased raw- materials for Rs 1,00,000
Rs 2,00,000 paid to Govt. as excise duty.
Legal expenses incurred in connection with the issue of Capital
Legal expenses incurred by the company for income-Tax appeal Rs 15,000
Legal expenses incurred to prevent the misuse of our trade- mark Rs 10,000
Legal expenses incurred in connection with raising a loan for the business
A sum

Question 5

Question No 05 Chapter No 17 - D.K Goal 11 Class

Sarbjit Singh · Accepted Answer

Question No 05 Chapter No 17
05. State the reasons whether the following are capital or expenditure:

Rs 20,000 were spent for abstaining a license for starting the factory
A loan of Rs 8 lac@ 15% was taken on 1st October 2019 to construct the factory building. Factory became operational on 1st April 2020 and the loan was repaid on 30th June
Rs 50,000 were spent on advertising a new product, the benefit of the will be effective during four year.
A motor lorry purchased for Rs 5 lac and Rs 2,500

Question 6

Question No 06 Chapter No 17 - D.K Goal 11 Class

Sarbjit Singh · Accepted Answer

Question No 06 Chapter No 17
06. State with reasons whether the following receipt would be treated as capital or Revenue:

Rs 5,000 received from a customer whose account was previously written off as bad.
Rs 20,000 received from sale of old machine.
Rs 2,60,000 received from sale of Stock-in-trade.
Rs 5,00,000 is contributed by a partner as Capital
Took a loan of Rs 10 lac. From Punjab National Bank
Received Rs 4 lac as Subsidy from State Government.
Received Rs 8 lac as grant from State Gover

Question 7

Question No 07 Chapter No 17 - D.K Goal 11 Class

Sarbjit Singh · Accepted Answer

Question No 07 Chapter No 17
07. The following are a few transactions of Sugar Mill Company:-

Acquired 500 Bighas of land for an agriculture farm at an annul rent of Rs 25,000 and paid Rs 2,000 per Bigha as Lease Premium.
Spent 5 Lac. In purchasing animals and implement for the farm.
Cost of pucca water drains constructed on the land Rs 50,000
Two bullocks costing Rs 80,000 were killed by lightening
Canal irrigation charges paid to Government Rs 10,000
Besides sugarcane, other crops valued Rs

Question 8

Question No 08 Chapter No 17 - D.K Goal 11 Class

Sarbjit Singh · Accepted Answer

Question No 08 Chapter No 17
08. The following expenses relate to a motor lorry, purchased by a limited company for its business:

Bought an lorry for Rs 1,20,000 in an auction and paid Rs 1,500 as freight and cartage
Its overhauling charges amounted to Rs 30,000
Other accessories were purchased for Rs 18,000
Lorry was badly damaged in an accident and its repair cost was Rs 42,600
Compensation was paid to person involved in accident Rs 14,500
Lorry was sold for Rs 1,25,000
Driver’s salary, petr

Question 9

Question No 09 Chapter No 17 - D.K Goal 11 Class

Sarbjit Singh · Accepted Answer

Question No 09 Chapter No 17
09. State with reasons whether you would consider the following as Capital Expenditure or Revenue Expenditure

Amount spent on uniform of workers
White-washing of the factory building
Cost of stores consumed in manufacturing machinery for its installation in own factory
Wages paid for construction of the building extension
Import duty on raw-materials purchased

The solution of Question No 09 Chapter No 17: -

i
Reserve Expenditure

ii
Reserve Expenditure

iii
C

Question 10

Question No 10 Chapter No 17 - D.K Goal 11 Class

Sarbjit Singh · Accepted Answer

Question No 10 Chapter No 17
10. Classify the following between capital and Revenue giving reasons for the same:

Rs 5,000 spent towards addition to the machinery
Repair for Rs 1,000 necessitated by negligence
Rs 500 spent to remove a worn-out part and replace it with a new one.
Rs 100 wages paid in connection with the erection of new machinery
Old machinery of book value Rs 7,500 worn-out, Dismantled at a cost of Rs 1,000 and scrap realized for Rs 100
Second hand motor car purchased for Rs 10,

Question 11

Question No 11 Chapter No 17 - D.K Goal 11 Class

Sarbjit Singh · Accepted Answer

Question No 11 Chapter No 17
11. Classify the following expenses between Capital and Revenue stating reasons in each cases

Repair to a Second hand motor car purchased
The cost of registration of newly formed limited company
Spent Rs 6,000 as legal expenses for abuse of trade mark
A sum of Rs 50,000 was spent on dismantling removing and reinstalling plant machinery and fixtures.
Legal expenses incurred in defending a suit for breach of contract to supply goods
Temporary huts were constructed co

Question 12

Question No 12 Chapter No 17 - D.K Goal 11 Class

Sarbjit Singh · Accepted Answer

Question No 12 Chapter No 17
12. State by giving reasons whether the following items of expenditure are Capital or Revenue

Expenditure incurred for raising loans
Expenditure of registrations of a trade mark
Carriage paid on goods purchased 
Commission paid on net profit of the company to manager
Travelling expenses of a director for tips abroad for purchasing capital goods.
Damages on account of contract
Compensation paid to a retrenched employee.

The solution of Question No 12 Chapter No 17:

Question 13

Question No 13 Chapter No 17 - D.K Goal 11 Class

Sarbjit Singh · Accepted Answer

Question No 13 Chapter No 17
13.The swadeshi Industries removed their works to a more suitable premises.

A sum of Rs 4,750 was spent on dismantling removing and re-installing plant, machinery and Fixtures.
The removal of stock from the old works to the new one cost Rs 500
Plant and machinery which stood in the books at Rs 75,000 included a machine at a book value of Rs 1,700. this being obsolete was sold off at Rs 450 and was replaced by a new machine which cost Rs 2,400
The freight and cartag

(i)	It is a capital Expenditure and will be Debited to Machinery Account because the expenses have been incurred before the Machinery is put to use.
(ii)	It is a capital Expenditure and will be Debited to Factory Account because the expenses have been incurred before the Factory is put in use.
(iii)	It is a capital Expenditure and will be Debited to Machinery Account because the expenses have been incurred before the Factory is put in use.
(iv)	It is a capital Expenditure and will be Debited to Generator Account because the expenses have been incurred before the Factory is put in use.
(v)	It is a Revenue Expenditure and will be Debited to Repair Account because the expenses have been incurred on the repair of existing Machines. It is an expenditure of routine nature.
(vi)	It is a capital Expenditure and will be Debited to Generator Account because brokerages is item of capital expenditure it is incurred on issue of share

D.K Goal +1 New ISC Accountancy Solutions Chapter No. 17 - Capital and Revenue

Quick Chapter Summary & Cheat Sheet

💡 Double Entry Accounting Principles

Topics & Questions Solved:

Table of Contents