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

Question No 04 Chapter No 17

04. State by Giving reasons whether the following items of Expenditure are capital or Revenue.

1. Purchased raw- materials for Rs 1,00,000
2. Rs 2,00,000 paid to Govt. as excise duty.
3. Legal expenses incurred in connection with the issue of Capital
4. Legal expenses incurred by the company for income-Tax appeal Rs 15,000
5. Legal expenses incurred to prevent the misuse of our trade- mark Rs 10,000
6. Legal expenses incurred in connection with raising a loan for the business
7. A sum of Rs 5 lac was paid for the purchase of an agriculture farm. Annual land revenue paid Rs 10,000
8. Damages paid on account of breach of contract Rs 20,000
9. Sold off an obsolete machine having book value of Rs 15,000 at 3,000
10. Rs 50,000 paid as wages to the workers

The solution of Question No 04 Chapter No 17: –

i	It is a Revenue Expenditure and will be Debited to Purchases Account because the expenses have been incurred on the repair of existing Machines. It is an expenditure of routine nature.
ii	It is a Revenue Expenditure and will be Debited to Govt. Excise duty Account because the expenses have been incurred on the repair of existing Machines. It is an expenditure of routine nature.
iii	It is a Capital Expenditure and will be Debited to Issue to shares Account
iv	It is a Revenue Expenditure and will be Debited to Income Tax Account because it is an expenditure of routine nature.
v	It is a Revenue Expenditure and will be Debited to Income Tax Account because it is an expenditure of routine nature.
vi	It is a Capital Expenditure and will be Debited to Trade-mark Account
vii	5 lac is the Capital Expenditure and Rs 10,000 is the Revenue Expenditure
viii	It is a Revenue Expenditure and will be Debited to Damages Account because it is an expenditure of routine nature.
ix	Rs. 12,000 is the Revenue Expenditure
x	It is a Revenue Expenditure and will be Debited to Income Tax Account because it is an expenditure of routine nature.

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Also, Check out the solved question of all Chapters: –

D K Goel – New ISC Accountancy -(Class 11 – ICSE)- Solution

• Chapter 1 Evolution of Accounting & Basic Accounting Terms
• Chapter 2 Accounting Equations
• Chapter 3 Meaning and Objectives of Accounting
• Chapter 4 Double Entry System
• Chapter 5 Books of Original Entry – Journal 
• Chapter 6 Accounting for Goods and Service Tax (GST) (Coming soon)
• Chapter 7 Books of Original Entry – Cash Book (Coming soon)
• Chapter 8 Books of Original Entry – Special Purpose Subsidiary Books (Coming soon)
• Chapter 9 Ledger (Coming soon)
• Chapter 10 Trial Balance and Errors (Coming soon)
• Chapter 11 Bank Reconciliation Statement (Coming soon)
• Chapter 12 Depreciation (Coming soon)
• Chapter 13 Bills of Exchange (Coming soon)
• Chapter 14 Generally Accepted Accounting Principles(GAAP) 
• Chapter 15 Bases of Accounting
• Chapter 16 Accounting Standards and International Financial Reporting Standard(IFRS) (Coming soon)
• Chapter 17 Capital and Revenue 
• Chapter 18 Provisions and Reserves 
• Chapter 19 Final Accounts (Coming soon)
• Chapter 20 Final Accounts – With Adjustments (Coming soon)
• Chapter 21 Errors and their Rectification (Coming soon)
• Chapter 22 Accounts from Incomplete Records – Single Entry System (Coming soon)
• Chapter 23 Accounts of Not-for-Profit Organisations (Coming soon)
• Chapter 24 Computerised Accounting System (Coming soon)
• Chapter 25 Introduction to Accounting Information System (Coming soon)

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