2025 · Q78
Which one of the following is a revenue expenditure?
General Accounting Principles, Auditing and InsuranceRoyalty accounts
- AOverhaul expenses of a second hand machinery purchased
- BLegal fees to acquire a property
- CAmount spent for replacement of worn-out portion of a machine
- DExpenses in connection with obtaining a license for running the cinema hall
Explanation
Replacing a worn-out portion of a machine is routine repair and maintenance, a revenue expenditure charged to the current period. Overhauling a second-hand machine before use and legal fees to acquire a property are capital expenditures (they enhance or create the asset), while the cinema licence expense is of a capital nature in this classification.