T level Finance Forms of expenditure

What is capital expenditure?

• Costs incurred in earning revenue

• Payment in advance for goods/services

• Purchasing assets with a life expectancy of more than one year

• Short-term expenses that impact the income statement

Which of the following is an example of revenue expenditure?

• Buying a new company building

• Hiring staff for ongoing operations

• Purchasing new machinery for a factory

• Paying for a patent license

Deferred revenue expenditure refers to:

• Costs related to business expansion

• Payment made in advance for goods/services to be received later

• Long-term investment in assets

• Money spent on employee salaries

Which of the following is NOT a fixed cost?

• Rent

• Raw materials

• Depreciation

• Administrative salaries

Which of the following describes economies of scale?

• Increased unit costs due to business growth

• Reduction in costs per unit as production increases

• Business failures due to mismanagement

• Increased government regulations on large businesses

What type of expenditure would a company’s monthly electricity bill fall under?

• Capital expenditure

• Revenue expenditure

• Deferred revenue expenditure

• None of the above

A business that benefits from bulk purchasing discounts is experiencing which type of economy of scale?

• Technological economies of scale

• Specialism economies of scale

• Purchasing economies of scale

• Diseconomies of scale

Which of the following is NOT a type of business insurance?

• Public liability insurance

• Product liability insurance

• Professional indemnity insurance

• Life insurance

Which of the following is not a type of business insurance?

• Public liability insurance

• Employer’s liability insurance

• Fixed asset insurance

• Commercial legal protection insurance

What does depreciation refer to in financial reporting?

• A decrease in the value of a company's stock

• The spreading of an asset's cost over its useful life

• A business expense incurred for employee wages

• The immediate deduction of capital expenditures