Question

Question 26 :
Purchase of new Car for instruction purpose is
revenue receipt
revenue expenditure
O capital receipt
O capital expenditure

Answer 1

Answer:

Question 26:

Purchase of new Car for instruction purpose is Capital expenditure.

Explanation:

Capital expenditure is the expenditure incurred for which the economic benefits are going to accrue or received over the useful life of the asset, generally more than 12 months.

In the given situation, purchase of car for instruction purpose is also capital expenditure were inflows are going be received from the initial investment made.

Car is a fixed asset on which depreciation is claimed over the useful life of the asset.

Journal Entry:

Car A/c--------------Dr

      To Cash A/c

(Being car purchased)