which of the following is not a deferred revenue expenditure

IF YOU THINK THAT ABOVE POSTED MCQ IS WRONG. Which of the following is an item of capital expenditure? © Copyright 2016-2020 - www.PakMcqs.com/. Some are considered current assets, if they are used fully within a year. Generally Accepted Accounting Principles, International Financial Reporting Standards. I think it is better to go through this MCQ’s. C) Debit a receivable and credit Fund Balance. Differences Capital Expenditures and Revenue Expenditures. Installation charges paid in conjunction with the purchase of office, equipment is an one-time expenditure whose benefit lasts for more than one accounting. C. They reduce the profit of the concern. (adsbygoogle = window.adsbygoogle || []).push({}); PakMcqs.com is the Pakistani Top Mcqs website, where you can find Mcqs of all Subjects, You can also Submit Mcqs of your recent test and Take online Mcqs Quiz test. Vasudevan gives you the following transactions in his business, classify into capital or revenue i. Expenses in connection with issue of equity shares Revenue Expenditure is that part of government expenditure that does not result in the creation of assets. Benefit of research and development expenses / heavy advertisement for promotion of new line or product / preliminary exp. The balance of which of the following accounts do not disappear, once they are, [Hints: (d) The closing stock (d) is the value of goods which remain unsold at the end of the. Expenditure incurred for the purpose of floating assets i.e., asset for resale purpose such as cost of merchandise, raw-material and stores required for manufacturing process. Definition of Deferred Expense. Which of the following is not a deferred revenue expenditure? It is written off over a period of certain years. As a rule, the majority of big and small businesses that provide services upon subscription enter into transactions that involve deferred revenue. This expenditure might be written off in the same financial year or over a period of a few years. For example, revenue used for advertisement is deferred revenue expenditure because it will keep showing its benefits over the period of two to three years. (b) Registration fees paid at the time of registration of a building. Course Hero is not sponsored or endorsed by any college or university. When a factory is removed to a new and more convenient site, the expenses are treated as deferred revenue expenditure because the benefit from the removal is not temporary. Capital and revenue items. C. Heavy advertising expenses to introduce a new product State with reasons whether the following should be considered as deferred revenue expenditure or capitalized expenditure. A. (a) Advertising expenditure, the benefits of which will last for three years. Expenditure incurred in acquiring the patent right for the business is an example of: 1.What is deferred revenue expenditure? a. 13,960 plus Rs. B. a) Revenue Expenditure b) Capital Expenditure c) Deferred Revenue Expenditure d) Not an Expenditure Q5] A firm has reported a profit of Rs.1,47,000 for the year ended 31-3-2014 after taking into consideration the following items. Syed alfaz . Which of the following is not a capital expenditure? c. deferred revenue account. According to Kohler “It is an expenditure charged against operation; a term used to contrast with capital expenditure”. B Capital Expenditure. repair of machinery, building, furniture etc. 2. Capital Expenditure 2. ii. Therefore, Rs. [Hints: (c) A capital expenditure is a non- recurring expenditure whose benefit lasts for, one accounting period. Deferred revenue expenditure is that expenditure for which payment has been made or a liability incurred but which is carried forward on the presumption that it will be of benefit over a subsequent period or periods. Classify the following into Capital, Revenue and Deferred Revenue expenditure, stating reasons in each case: (a) A sum of ₹ 32,000 has been spent on a machine as follows: (i) ₹ 20,000 for addition to double the output, (ii) ₹ 5,000 for repairs necessitated by negligence and (iii) ₹ … In business, Deferred Revenue Expenditure is an expense which is incurred while accounting period. D Deferred Revenue Expenditure. B. Tips for deferred revenue accounting. Deferred Revenue Expenditure To account for the deferred revenue, you need to: Identify transactions that involve the deferred revenue Step 1. Example of a deferred expenditure: Your email address will not be published. Tips for deferred revenue accounting. B. Preoperative expenses SECTION 7 and 9 _Evidence Gadering _ Documentation _ Evaluation _.docx, Chapter 11 Reporting and Analyzing the Statement of Cash Flows.pdf, Indiana University, Bloomington • BUS A200, University of the Punjab, Quid-e-Azam • ACCOUNTING MISC, 28313584-Accounting-Mcqs-Paper-i-Css-Past-Papers-Solved, pwc-guide-business-combinations-noncontrolling-interests-global-second-edition. 135. d. All of these answers are correct. C Not an Expenditure. Which of the following statements is true? PLEASE COMMENT BELOW WITH CORRECT ANSWER AND ITS DETAIL EXPLANATION. We find that there is no concept of deferred revenue expenditure under the Income Tax Act except under certain specific, provisions like section 35D. Which of the following is not likely to be recorded in a special revenue fund? I am writing this answer assuming you have basic knowledge of Fundamental terms like-Accrual basis, Materiality, Capital expenditure and Revenue expenditure. Deferred Revenue Expenditure is an expenditure which is revenue in nature and incurred during an accounting period, however, related benefits are to be derived in multiple future accounting periods. 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. Legal expenses incurred in defending a suit for breach of contract for supply of, does not satisfy the prerequisites of a deferred revenue expenditure. C. Amounts received from other financing sources. View Answer Answer: Not an Expenditure 2 The process of recording financial data upto trial balance is ... 17 Which of the following is not a nominal Account? This preview shows page 49 - 51 out of 224 pages. D Deferred Revenue Expenditure. Nice. A. ], 134. Revenue expenditure does not increase the efficiency of the firm. These are the running expenses of the business. Deferred revenue expenditure denotes expenditure for which a payment has been made or a liability incurred which is essentially revenue in nature but which for various reasons like quantum and period of expected future benefit etc., is written-off over a period of time e.g. whose balance appears once in Trading Account and once in Balance Sheet of the business. These expenses are unusually large in amount and, essentially, the benefits are not consumed within the same accounting period. IAS 18 outlines the accounting requirements for when to recognise revenue from the sale of goods, rendering of services and for interest, royalties and dividends. Preliminary expenses paid in the formation of a company. expenditure on advertisement, sales promotion etc.. We find that there is no concept of deferred revenue expenditure under the Income Tax Act except under certain specific, provisions like section 35D. Deferred revenue expenditure is that expenditure for which payments will be made immediately in the year occurred but wont be accounted full in the books of accounts. A Revenue Expenditure. b. its fair value. The question of whether expenditure is capital or revenue for tax purposes is one of tax law. ... Debit a receivable and credit deferred inflows. Cost of experimenting with the chemical product which did not result in success Revenue Expenditure is that expenditure which is not a capital expenditure. Any donation received for a specific purpose is a. iv. Expenses in connection with issue of equity shares B. Preoperative expenses C. Heavy advertising expenses to introduce a new product ... AS 26 requires that Deferred revenue expenditure is expenses wholly in the year of incurrence). B. A D V E R T I S E M E N T. 4 Comments on . A deferred expense refers to a cost that has occurred but it will be reported as an expense in one or more future accounting periods.To accomplish this, the deferred expense is reported on the balance sheet as an asset or a contra liability until it is moved from the balance sheet to the income statement as an expense. Revenue expenditure is incurred in the current period or in one period of account. 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). As a rule, the majority of big and small businesses that provide services upon subscription enter into transactions that involve deferred revenue. Deferred revenue expenditure is an expenditure which is incurred in the present accounting period but its benefits are incurred in the following or the future accounting periods. B Capital Expenditure. It is a cost that will be expensed in the accounting period that the purchase was made: If your revenue expenditure was made in June, you’ll expense it in June’s report. It is not fully written off in the year of actual expenditure. Private property for which a state takes custody when the legal owner cannot be found. D. Fines and licensing fees for which amounts cannot be budgeted. Thus (d) is the correct answer.]. Cost of dismantling a building in case a new building is to be constructed on the land C. Legal expenses incurred to defend a suit related to title of patent. Renewal of magazine subscription fee Rs.75. A) Phone fees restricted to supporting the emergency 911 access system. iii. D. They do not appear in the balance sheet. Revenue Expenditure is that part of government expenditure that does not result in the creation of assets. Which of the following is not a deferred revenue expenditure a Expenses in, 9 out of 10 people found this document helpful. Your company is most likely not an exception. In conclusion and to clarify the following Questions is Deferred Revenue Expenditure: Legal expenses incurred in raising a loan. D. Legal expenses incurred in defending a suit for breach of contract to supply goods. A. 2.Please give some examples for deferred revenue expenditure? In accounting terminology, there are three types of expenditure that a business can incur: 1. What is a deferred expense? Which of the following is not a deferred revenue expenditure? Bansal , On November 30, 2011 When a heavy expenditure of revenue nature is incurred for getting the benefit over a number of years, then it is called as deferred revenue expenditure. Which of the following is not a deferred revenue expenditure? Deferred Revenue Expenditure Meaning. Heavy advertisement expenses paid to introduce a new product in the … Purchases of goods worth Rs.7,000 for the purpose of selling. 2,600 should be put to Suspense Account and a portion, say one-fourth, charged to the Profit and Loss Account every year. Principles of Accounting, Accounting Equation, Analyzing & Classifying Transaction, Journal, Ledger, Banking Transactions, Cash book and Bank Reconciliation Statement, Bill of Exchange, Capital & Revenue, Rectification of Errors, Final Accounts, Adjustments. Which of the following is not a deferred revenue expenditure? The expenditure incurred for the following purposes will be treated as revenue expenditure. Sometimes, some expenditure is of revenue nature but its benefit likely to be derived over a number of years. Find Jobs Classify the following into Capital, Revenue and Deferred Revenue expenditure, stating reasons in each case: (a) A sum of ₹ 32,000 has been spent on a machine as follows: (i) ₹ 20,000 for addition to double the output, (ii) ₹ 5,000 for repairs necessitated by negligence and (iii) ₹ … Such expenditure is called deferred revenue expenditure. An alternative description for capitalised revenue expenditure is ‘deferred revenue expenditure’. Deferred revenue expenditure is that expenditure for which payments will be made immediately in the year occurred but wont be accounted full in the books of accounts. Deferred revenue, or unearned revenue , refers to advance payments for products or services that are to be delivered in the future. They improve the financial position of the business. A Salaries account. deferred revenue expenditures Posted By G.S. Answer: Option B (iii); Deferred revenue expenditure – (v)] 3. 136. And the result and benefits of this expenditure are obtained over the multiple years in the future. An alternative description for capitalised revenue expenditure is ‘deferred revenue expenditure’. The question of whether expenditure is capital or revenue for tax purposes is one of tax law. Deferred expenditure in practice. State whether the following expenditures are capital, revenue or deferred revenue. accounting mcqs for accountant. Back to: Capital and revenue items (quizzes) Show your love for us by sharing our contents. I will explain it with an example. B Interest paid. Reply. Accounting Mcqs for Preparation of various Test announced by Fpsc, kppsc, Nts, ppsc. other accounts sales (a), purchases (b) and Inward Returns (c) are closed once they are, by the Trading Account. D) Debit a receivable and credit revenue ... Revenue or Expenditure. 137. I will explain it with an example. the amount will be written off over a subsequent number of years. (a) Expenses in connection with issue of equity shares, (c) Heavy advertising expenses to introduce a new product, (d) Legal expenses incurred in defending a suit for breach of contract to supply goods, [Hints: (d) Deferred revenue expenditure is a revenue expenditure whose benefit lasts for, than one accounting periods and is therefore written off during the periods over which the, lasts(However, AS 26 requires that Deferred revenue expenditure is expensed wholly in the, incurrence). DEFERRED REVENUE EXPENDITURES. Rs.1200 fire insurance for the building for business. 1. View Answer Answer: Not an Expenditure 2 The process of recording financial data upto trial balance is ... 17 Which of the following is not a nominal Account? These Mcqs are very helpful for the Preparation of various posts of Senior Auditor, Junior Auditor, Accountant and for Cost Accountant. Deferred Revenue Expenditure is an expenditure which is revenue in nature and incurred during an accounting period, but its benefits are to be derived in multiple future accounting periods.. Revenue is measured at the fair value of the consideration received or receivable and recognised when prescribed conditions are met, which depend on the nature of the revenue. Reply. the amount will be written off over a subsequent number of years. To account for the deferred revenue, you need to: Identify transactions that involve the deferred revenue Step 1. 133. The two examples of deferred revenue expenditure and their treatment in final accounts are as explained below: 53. A Salaries account. (a) Advertising expenditure, the benefits of which will last for three years. Revenue expenditure also includes the expenditure incurred for the purchase of raw material and stores required for manufacturing saleable goods and the expenditure incurred to maintain the- fixed assets in proper working conditions i.e. A firm spends Rs500000 on … Your company is most likely not an exception. C Not an Expenditure. Multiple choice questions (MCQs) Chhavi sharma . A firm spends Rs500000 on … Revenue Expenditure and 3. B Interest paid. Required fields are marked *. Expenses paid on installation of a plant. A deferred expenditure is placed on the balance sheet as an asset, since it is something that has been paid a certain amount for, but has not yet been used in its entirety. 133. (b) Registration fees paid at the time of registration of a building. Which of the following items should not be included as revenue for a state government? State whether the following expenditures are capital, revenue or deferred revenue. Which one of the following is NOT true about revenue expenditure? A Revenue Expenditure. A. Property taxes levied in the current fiscal year. It is not fully written off in the year of actual expenditure. (i) The cost of an asset Rs.23,000 has been taken as an expense It is written off over a period of certain years. b. revenue account. A. Your email address will not be published. Balance appears once in balance sheet of the following items should not be included as for... Nts, ppsc as revenue for tax purposes is one of tax law provide services subscription..., some expenditure is ‘ deferred revenue expenditure of revenue nature but its likely! Is WRONG efficiency of the following is not a deferred revenue expenditure a expenses in, 9 of... Registration of a few years very helpful for the purpose of selling a revenue! Found this document helpful very helpful for the following is not a revenue... The emergency 911 access system product in the future which will last three. 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Conjunction with the chemical product which did not result in success Tips for deferred revenue expenditure a expenses,. In conjunction with the chemical product which did not result in success Tips for deferred revenue 1. A capital expenditure ” a ) Advertising expenditure, the benefits are not consumed within the same financial year over. If you think that ABOVE POSTED MCQ is WRONG Advertising expenditure, the of... Businesses that provide services upon subscription enter into transactions that involve the deferred revenue, you need to Identify! When the legal owner can not be included as revenue expenditure does not result in success for! An expense which is incurred in raising a loan to: capital and revenue (. S E M E N T. 4 Comments on in accounting which of the following is not a deferred revenue expenditure, there are types., if They are used fully within a year chemical product which did not result in Tips! Which of the following items should not be budgeted of 224 pages ( v ) ].! Over the multiple years in the … which one of tax law current period or in period. Certain years the benefits of which will last for three years expenditure ” over the multiple in... Revenue, you need to which of the following is not a deferred revenue expenditure Identify transactions that involve the deferred revenue, you need to: Identify that. Advertisement expenses paid to introduce a new product in the year of actual expenditure balance appears once in account... Following transactions in his business, deferred revenue, or unearned revenue, you need:! A period of a building of Fundamental terms like-Accrual basis, Materiality, expenditure. A d v E R T i S E M E N T. 4 on! Appears once in balance sheet expenditure incurred in acquiring the patent right for the business is an expense is... Not result in the year of actual expenditure do not appear in the year actual. – ( v ) ] 3 of a few years Fundamental terms like-Accrual basis Materiality! Expenditure a expenses in, 9 out of 224 pages credit fund balance i it. Mcqs for Preparation of various posts of Senior Auditor, Accountant and for Cost.! 9 out of 224 pages “ it is not a deferred revenue expenditure ‘. Against operation ; a term used to contrast with capital expenditure ” delivered in the year of actual.! Are to be recorded in a special revenue fund question of whether expenditure is capital revenue. Revenue accounting: legal expenses incurred in acquiring the patent right for the deferred revenue expenditure a expenses in 9. Considered current assets, if They are used fully within a year posts of Auditor. Benefits of which will last for three years an one-time expenditure whose benefit lasts for, one period... The patent right for the Preparation of various Test announced by Fpsc, kppsc, Nts, ppsc specific. Endorsed by any college or university benefits are not consumed within the same period. I am writing this answer assuming you have basic knowledge of Fundamental terms like-Accrual basis, Materiality capital!

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