Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Nicholas is a high-end retailer of designer products. Some of the following transactions should be treated as capital transactions and some as revenue transactions: (i)

Nicholas is a high-end retailer of designer products. Some of the following transactions should be treated as capital transactions and some as revenue transactions:

(i) Fire insurance premium on premises paid by cheque

(ii) Improvements to shop premises by additions and alterations

(iii) Purchased cameras to install in the shop to prevent shoplifting

(iv) Income tax paid to Inland Revenue Authority of Singapore

(v) Cash drawings by the Proprietor

(vi) Additional racks bought, paid by cheque

(vii) Legal fee for purchase of land and building

(viii) Paid staff salaries by cheque

(ix) Purchase of petrol for existing delivery vehicle and paid using cash

(x) Cost of painting shop

Required: For each item given above, state whether it is capital expenditure or revenue expenditure in nature and explain your answer justifying your classification.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting What The Numbers Mean

Authors: David Marshall, Wayne McManus, Daniel Viele

10th Edition

77729870, 9780077729875

More Books

Students also viewed these Accounting questions