NCA (Capital & Revenue exp)

What is Prof Tan's full name?

• Tan Heng Kiat, Kelvin

• Tan Heng Heng, Kelvin

Answer explanation

Prof Tan Heng Kiat, Kelvin is a well-known associate professor at NIE who specializes in assessment, feedback, reflection and learning.

Which of the following is the capital expenditure?

• Costs to buy non-current asset

• All costs to bring non-current assets to their intended use

• Costs to enhance non-current asset. e.g. major overhaul cost

• Provide benefits that last for more than 1 year

• All of the above

Which of the following describes Revenue Expenditure?

• Costs to operate, repair and maintain the non-current asset in working condition

• Provides benefits that last only for one year

• Recorded as expense

• All of the above

Xuan Hao runs a delivery business and incurred the following expenditure. Match the following.

• Road tax

• Revenue expenditure

• Purchase of motor vehicles

• Revenue expenditure

• Petrol

• Capital expenditure

Answer explanation

- cost to purchase motor vehicles is capital expenditure as it provides benefits for more than a year.

- Petrol and road tax provide benefits that last only for one year and therefore are revenue expenditure.

Xuan Ting runs an accounting firm and incurred the following expenditure. Match the following.

• Revenue expenditure

• Installation cost of photocopier

• Capital expenditure

• Annual maintenance cost

• Revenue expenditure

• Repair cost during a breakdown

• Capital expenditure

• Purchase photocopier for business

• Revenue expenditure

• Toner for printing

Answer explanation

1. cost to purchase printer- provides benefits more than a year and therefore capital expenditure.

2. installation cost- necessary to bring the printer to an intended use and therefore capital expenditure.

3. Toner - provides benefits that last only for one year and therefore revenue expenditure.

Sueanne runs a renovation business and incurred the following expenditure. Payment were made by bank transfer.

Cost to purchase showroom= $50 000

Paid agent fees incurred for purchase of showroom= $2 000

Purchase of Christmas decoration for office= $ 100

Installation of newly designed shelves and cabinets in the showroom= $8 000

Which of the following journal entry correctly describes the capital expenditure.

• Dr Property $60 000

  Cr Cash at bank $60 000

• Dr Property $52 000

  Cr Cash at bank $52 000

• Dr Property $100

  Cr Cash at bank $100

• Dr Property $50 000

  Cr Cash at bank $50 000

Answer explanation

The capital expenditure are:

- Cost to purchase showroom

- Agent fees

- Installation of shelves and cabinets

As the above provide benefits for more than one year.