Question

December, 2003, except for items (a) to (h) below, is 27,600. He is not sure what effect certain
0.5: S. Kahar runs a school of motoring. He informs you that his net profit for the year ended 31st
transactions will have on his net profit and asks you to help him to distinguish between Capital
17
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Expenditure and Revenue Expenditure, and between Capital Receipts and Revenue Receipts.
Mr Kahar provides you with his list of items as shown below:
(a) Motor car repairs
5,400
(b) Telephone rental and charges
2,400
(c) Cash received in respect of insurance claims for damage to cars used for instruction 4,800
(d) Rent received from sub-letting flat above office
6,000
(e) Purchase of new car for instruction purposes
13,500
0) Proceeds from sale of old car replaced by the new vehicle
1,500
(9) Cost of petrol and oil
5,250
(h) Commission received from motor car manufacturers
840
You are asked to:
(1) enter the items under one of four headings:
Capital Expenditure
Revenue Expenditure
Capital Receipts
Revenue Receipts
(1) draw up a statement showing what effect, i.e. increase / decrease, each item will have on the net
profit of 27,600 as originally calculated, and give your revised figure of net profit. If you consider
that an item will have no effect write "no effect".
[Ans.: (0) CE - (e); CR - (0); RE - (a), (b), (g); RR - (c), (d), (h)​

Answer 1

Answer:

Ans.: (0) CE - (e); CR - (0); RE - (a), (b), (g); RR - (c), (d), (h)

Answer 2

Answer:

Answer=> (0) CE - (e) , CR - (0), RE - (a), (b), (g), RR - (c), (d), (h)

Hope it helps ❤️