(i) Can you help Sadhana to classify the expenditure? (ii) What other capital, revenue and deferred revenue expenditure her

Question

Sadhana decides to start a business of selling air – conditioners. She buys different brands of air – conditioners. She also buys a delivery van, some furniture and some tools to fix air- conditioners. She buys some stationery items and cleaning liquid. She spends some amount on advertising her shop. She records the entire amount spent in the trading account. 

Now, discuss on the following points:

(i) Can you help Sadhana to classify the expenditure?

(ii) What other capital, revenue and deferred revenue expenditure her business may incur in the future?

Answer 1

(i) Yes, I can help Sadhana to classify the expenditure:

Capital expenditure	Revenue expenditure	Deferred Revenue Expenditure
Non- recurring	Recurring	Non-recurring
1. Delivery van	1. Airconditioners	She spends some amount on advertising her shop
2. Furniture	2. Stationery items
3. Tools	3. Cleaning liquid

In the future:

Capital expenditure	Revenue expenditure	Deferred Revenue Expenditure
1.Building extension	1. Airconditioners	A huge advertising.
2. Computer for office use	2. Other home appliances
3. Other furniture