(a) What is meant by ‘capital expenditure’, and ‘revenue expenditure’?

(b) Some of the following items should be treated as capital and some as revenue. For each of them state which classification applies:

(i) The purchase of machinery for use in the business.

(ii) Carriage paid to bring the machinery in (i) above to the works.

(iii) Complete redecoration of the premises at a cost of £1,500.

(iv) A quarterly account for heating.

(v) The purchase of a soft drinks vending machine for the canteen with a stock of soft drinks.

(vi) Wages paid by a building contractor to his own workmen for the erection of an office in the builder’s stockyard.