Understand and distinguish between capital expenditure and revenue expenditure.

Question 1. Record the following transactions by using the double entry system:
Feb. 1: Paid rent by cash of €65.
Feb. 3: Provide €15 discount to B. Camenzuli for early payment.
Feb. 8: Paid electricity of €120 by cheque.
Feb. 10: Paid rates of €70 by cash.
Feb. 17: Received €33 discount from R. Supplies for early payment.
Feb. 20: Received commission of €220, which was deposited in the bank account.
Feb. 27: Paid wages of €3,000 by cheque.

Question 2. Reflect the following transactions in the respective accounts:
Nov. 1: Paid insurance of €78 by cheque.
Nov. 7: Settled motor vehicle repairs of €85 by cash.
Nov. 8: Received rent of €140, which was deposited in the bank account.
Nov. 10: Paid stationery of €12 by cash.
Nov. 11: Received discount of €45 from D. Smith for settling the account 20 days before the credit period allowed.
Nov. 14: Paid water and electricity of €180 by cash.
Nov. 15: Paid rates of €110 by cheque.
Nov. 20: Paid sundry expenses of €89 by cash.
Nov. 23: Received money from R. Saliba of €842. A discount of €18 was given to this customer for earlier payment. This money was deposited in the bank account.

Question 3.

a) What is the difference between capital expenditure and revenue expenditure?

b) Complete the following table by placing the expenditure in its appropriate category:

Question 4. Distinguish the following between capital and revenue expenditure:

a) Legal costs on collecting money from trade receivables.

b) Carriage costs on sales.

c) Carriage expenditure on purchases.

d) Motor vehicles insurance.

e) Purchase of machinery.

f) Transportation paid for machinery purchased.
g) Cost of rebuilding warehouse.
h) Salaries of office clerks.
i) Motor vehicles repaired.
j) Bank charges.
k) Purchase of air conditions.
l) Cost of installing air conditions.
m) Purchase of new computer equipment.