Deferred revenue expenditure is that expenditure for which payment has been made or a liability incurred but which is carried forward on the presumption that it will be of benefit over a subsequent period or periods. D. Legal expenses incurred in defending a suit for breach of contract to supply goods. We find that there is no concept of deferred revenue expenditure under the Income Tax Act except under certain specific, provisions like section 35D. A Salaries account. Example of a deferred expenditure: As a rule, the majority of big and small businesses that provide services upon subscription enter into transactions that involve deferred revenue. The two examples of deferred revenue expenditure and their treatment in final accounts are as explained below: d. All of these answers are correct. Legal expenses incurred in defending a suit for breach of contract for supply of goods does not satisfy the prerequisites of a deferred revenue expenditure. C Not an Expenditure. C) Debit a receivable and credit Fund Balance. Expenses paid on installation of a plant. expenditure on advertisement, sales promotion etc.. Private property for which a state takes custody when the legal owner cannot be found. According to Kohler “It is an expenditure charged against operation; a term used to contrast with capital expenditure”. In business, Deferred Revenue Expenditure is an expense which is incurred while accounting period. C Not an Expenditure. The question of whether expenditure is capital or revenue for tax purposes is one of tax law. Any donation received for a specific purpose is a. Benefit of research and development expenses / heavy advertisement for promotion of new line or product / preliminary exp. C. Amounts received from other financing sources. Revenue expenditure does not increase the efficiency of the firm. B Interest paid. Revenue is measured at the fair value of the consideration received or receivable and recognised when prescribed conditions are met, which depend on the nature of the revenue. C. Heavy advertising expenses to introduce a new product I will explain it with an example. (b) Registration fees paid at the time of registration of a building. D. Fines and licensing fees for which amounts cannot be budgeted. Cost of experimenting with the chemical product which did not result in success B. Deferred revenue expenditure is an expenditure which is incurred in the present accounting period but its benefits are incurred in the following or the future accounting periods. Which of the following is not likely to be recorded in a special revenue fund? View Answer Answer: Not an Expenditure 2 The process of recording financial data upto trial balance is ... 17 Which of the following is not a nominal Account? They improve the financial position of the business. I am writing this answer assuming you have basic knowledge of Fundamental terms like-Accrual basis, Materiality, Capital expenditure and Revenue expenditure. Purchases of goods worth Rs.7,000 for the purpose of selling. (i) The cost of an asset Rs.23,000 has been taken as an expense It is not fully written off in the year of actual expenditure. In accounting terminology, there are three types of expenditure that a business can incur: 1. State whether the following expenditures are capital, revenue or deferred revenue. IF YOU THINK THAT ABOVE POSTED MCQ IS WRONG. iv. Your company is most likely not an exception. A D V E R T I S E M E N T. 4 Comments on . Revenue Expenditure and 3. This preview shows page 49 - 51 out of 224 pages. Cost of dismantling a building in case a new building is to be constructed on the land C. Legal expenses incurred to defend a suit related to title of patent. Heavy advertisement expenses paid to introduce a new product in the … I will explain it with an example. Multiple choice questions (MCQs) Chhavi sharma . Capital Expenditure 2. Some are considered current assets, if they are used fully within a year. An alternative description for capitalised revenue expenditure is ‘deferred revenue expenditure’. Legal expenses incurred in defending a suit for breach of contract for supply of, does not satisfy the prerequisites of a deferred revenue expenditure. [Hints: (c) A capital expenditure is a non- recurring expenditure whose benefit lasts for, one accounting period. (iii); Deferred revenue expenditure – (v)] 3. 1. A Revenue Expenditure. The balance of which of the following accounts do not disappear, once they are, [Hints: (d) The closing stock (d) is the value of goods which remain unsold at the end of the. Find Jobs 53. the amount will be written off over a subsequent number of years. State whether the following expenditures are capital, revenue or deferred revenue. 2,600 should be put to Suspense Account and a portion, say one-fourth, charged to the Profit and Loss Account every year. Your email address will not be published. Which of the following is not a deferred revenue expenditure? A Revenue Expenditure. A. Deferred Revenue Expenditure Meaning. In conclusion and to clarify the following Questions is Deferred Revenue Expenditure: Legal expenses incurred in raising a loan. PLEASE COMMENT BELOW WITH CORRECT ANSWER AND ITS DETAIL EXPLANATION. ... Debit a receivable and credit deferred inflows. Capital and revenue items. A Salaries account. (a) Expenses in connection with issue of equity shares, (c) Heavy advertising expenses to introduce a new product, (d) Legal expenses incurred in defending a suit for breach of contract to supply goods, [Hints: (d) Deferred revenue expenditure is a revenue expenditure whose benefit lasts for, than one accounting periods and is therefore written off during the periods over which the, lasts(However, AS 26 requires that Deferred revenue expenditure is expensed wholly in the, incurrence). A firm spends Rs500000 on … Deferred Revenue Expenditure Principles of Accounting, Accounting Equation, Analyzing & Classifying Transaction, Journal, Ledger, Banking Transactions, Cash book and Bank Reconciliation Statement, Bill of Exchange, Capital & Revenue, Rectification of Errors, Final Accounts, Adjustments. Answer: Option B Classify the following into Capital, Revenue and Deferred Revenue expenditure, stating reasons in each case: (a) A sum of ₹ 32,000 has been spent on a machine as follows: (i) ₹ 20,000 for addition to double the output, (ii) ₹ 5,000 for repairs necessitated by negligence and (iii) ₹ … ii. Deferred revenue, or unearned revenue , refers to advance payments for products or services that are to be delivered in the future. B. Revenue expenditure also includes the expenditure incurred for the purchase of raw material and stores required for manufacturing saleable goods and the expenditure incurred to maintain the- fixed assets in proper working conditions i.e. b. revenue account. A. Expenses in connection with issue of equity shares B. Preoperative expenses C. Heavy advertising expenses to introduce a new product ... AS 26 requires that Deferred revenue expenditure is expenses wholly in the year of incurrence). D) Debit a receivable and credit revenue ... Revenue or Expenditure. Deferred revenue expenditure is that expenditure for which payments will be made immediately in the year occurred but wont be accounted full in the books of accounts. A. other accounts sales (a), purchases (b) and Inward Returns (c) are closed once they are, by the Trading Account. As a rule, the majority of big and small businesses that provide services upon subscription enter into transactions that involve deferred revenue. (b) Registration fees paid at the time of registration of a building. State with reasons whether the following should be considered as deferred revenue expenditure or capitalized expenditure. Which of the following is an item of capital expenditure? Installation charges paid in conjunction with the purchase of office, equipment is an one-time expenditure whose benefit lasts for more than one accounting. a. Syed alfaz . We find that there is no concept of deferred revenue expenditure under the Income Tax Act except under certain specific, provisions like section 35D. Vasudevan gives you the following transactions in his business, classify into capital or revenue i. These Mcqs are very helpful for the Preparation of various posts of Senior Auditor, Junior Auditor, Accountant and for Cost Accountant. To account for the deferred revenue, you need to: Identify transactions that involve the deferred revenue Step 1. Preliminary expenses paid in the formation of a company. Tips for deferred revenue accounting. Expenses in connection with issue of equity shares And the result and benefits of this expenditure are obtained over the multiple years in the future. Deferred expenditure in practice. Revenue Expenditure is that part of government expenditure that does not result in the creation of assets. This expenditure might be written off in the same financial year or over a period of a few years. Rs.1200 fire insurance for the building for business. Which one of the following is NOT true about revenue expenditure? accounting mcqs for accountant. Bansal , On November 30, 2011 When a heavy expenditure of revenue nature is incurred for getting the benefit over a number of years, then it is called as deferred revenue expenditure. It is not fully written off in the year of actual expenditure. (adsbygoogle = window.adsbygoogle || []).push({}); PakMcqs.com is the Pakistani Top Mcqs website, where you can find Mcqs of all Subjects, You can also Submit Mcqs of your recent test and Take online Mcqs Quiz test. Course Hero is not sponsored or endorsed by any college or university. A deferred expense refers to a cost that has occurred but it will be reported as an expense in one or more future accounting periods.To accomplish this, the deferred expense is reported on the balance sheet as an asset or a contra liability until it is moved from the balance sheet to the income statement as an expense. Which of the following statements is true? D. They do not appear in the balance sheet. Definition of Deferred Expense. DEFERRED REVENUE EXPENDITURES. Which of the following items should not be included as revenue for a state government? Revenue Expenditure is that expenditure which is not a capital expenditure. Deferred revenue expenditure denotes expenditure for which a payment has been made or a liability incurred which is essentially revenue in nature but which for various reasons like quantum and period of expected future benefit etc., is written-off over a period of time e.g. Differences Capital Expenditures and Revenue Expenditures. 2. 13,960 plus Rs. Which of the following is not a deferred revenue expenditure a Expenses in, 9 out of 10 people found this document helpful. deferred revenue expenditures Posted By G.S. (a) Advertising expenditure, the benefits of which will last for three years. (a) Advertising expenditure, the benefits of which will last for three years. It is written off over a period of certain years. repair of machinery, building, furniture etc. A) Phone fees restricted to supporting the emergency 911 access system. Reply. 133. A firm spends Rs500000 on … Deferred revenue expenditure is that expenditure for which payments will be made immediately in the year occurred but wont be accounted full in the books of accounts. C. They reduce the profit of the concern. Classify the following into Capital, Revenue and Deferred Revenue expenditure, stating reasons in each case: (a) A sum of ₹ 32,000 has been spent on a machine as follows: (i) ₹ 20,000 for addition to double the output, (ii) ₹ 5,000 for repairs necessitated by negligence and (iii) ₹ … Sometimes, some expenditure is of revenue nature but its benefit likely to be derived over a number of years. Therefore, Rs. 2.Please give some examples for deferred revenue expenditure? b. its fair value. A. Your email address will not be published. Which of the following is not a capital expenditure? The expenditure incurred for the following purposes will be treated as revenue expenditure. whose balance appears once in Trading Account and once in Balance Sheet of the business. the amount will be written off over a subsequent number of years. Your company is most likely not an exception. a) Revenue Expenditure b) Capital Expenditure c) Deferred Revenue Expenditure d) Not an Expenditure Q5] A firm has reported a profit of Rs.1,47,000 for the year ended 31-3-2014 after taking into consideration the following items. B. Preoperative expenses These expenses are unusually large in amount and, essentially, the benefits are not consumed within the same accounting period. Which of the following is not a deferred revenue expenditure? Revenue Expenditure is that part of government expenditure that does not result in the creation of assets. An alternative description for capitalised revenue expenditure is ‘deferred revenue expenditure’. To account for the deferred revenue, you need to: Identify transactions that involve the deferred revenue Step 1. D Deferred Revenue Expenditure. Which of the following is not a deferred revenue expenditure? B Interest paid. When a factory is removed to a new and more convenient site, the expenses are treated as deferred revenue expenditure because the benefit from the removal is not temporary. Reply. Expenditure incurred in acquiring the patent right for the business is an example of: 1.What is deferred revenue expenditure? 135. Accounting Mcqs for Preparation of various Test announced by Fpsc, kppsc, Nts, ppsc. Nice. Thus (d) is the correct answer.]. ], 134. It is a cost that will be expensed in the accounting period that the purchase was made: If your revenue expenditure was made in June, you’ll expense it in June’s report. B Capital Expenditure. What is a deferred expense? 136. Property taxes levied in the current fiscal year. A. B Capital Expenditure. B. c. deferred revenue account. For example, revenue used for advertisement is deferred revenue expenditure because it will keep showing its benefits over the period of two to three years. Deferred Revenue Expenditure is an expenditure which is revenue in nature and incurred during an accounting period, but its benefits are to be derived in multiple future accounting periods.. Such expenditure is called deferred revenue expenditure. The question of whether expenditure is capital or revenue for tax purposes is one of tax law. Expenditure incurred for the purpose of floating assets i.e., asset for resale purpose such as cost of merchandise, raw-material and stores required for manufacturing process. D Deferred Revenue Expenditure. Deferred Revenue Expenditure is an expenditure which is revenue in nature and incurred during an accounting period, however, related benefits are to be derived in multiple future accounting periods. Tips for deferred revenue accounting. Generally Accepted Accounting Principles, International Financial Reporting Standards. It is written off over a period of certain years. Revenue expenditure is incurred in the current period or in one period of account. 137. I think it is better to go through this MCQ’s. Renewal of magazine subscription fee Rs.75. Which of the following is not a deferred revenue expenditure? IAS 18 outlines the accounting requirements for when to recognise revenue from the sale of goods, rendering of services and for interest, royalties and dividends. These are the running expenses of the business. iii. 133. © Copyright 2016-2020 - www.PakMcqs.com/. A deferred expenditure is placed on the balance sheet as an asset, since it is something that has been paid a certain amount for, but has not yet been used in its entirety. SECTION 7 and 9 _Evidence Gadering _ Documentation _ Evaluation _.docx, Chapter 11 Reporting and Analyzing the Statement of Cash Flows.pdf, Indiana University, Bloomington • BUS A200, University of the Punjab, Quid-e-Azam • ACCOUNTING MISC, 28313584-Accounting-Mcqs-Paper-i-Css-Past-Papers-Solved, pwc-guide-business-combinations-noncontrolling-interests-global-second-edition. D. Deferred revenue expenditure is a revenue expenditure whose benefit lasts for more than one accounting periods and is therefore written off during the periods over which the benefit lasts(However, AS 26 requires that Deferred revenue expenditure is expenses wholly in the year of incurrence). View Answer Answer: Not an Expenditure 2 The process of recording financial data upto trial balance is ... 17 Which of the following is not a nominal Account? Back to: Capital and revenue items (quizzes) Show your love for us by sharing our contents. Required fields are marked *. They are used fully within a year than one accounting period ) Registration fees paid at the time of of. Raising a loan writing this answer assuming you have basic knowledge of Fundamental like-Accrual... Principles, International financial Reporting Standards c ) a capital expenditure and revenue (... Are to be derived over a period of a few years is better to go through this MCQ ’.... Products or services that are to be derived over a period of a.. Not consumed within the same financial year or over a subsequent number of years right... The business the expenditure incurred in the same accounting period a year involve deferred revenue Step.! T i S E M E N T. 4 Comments on accounting Principles, International financial Reporting Standards whether... Expenditure and revenue items ( quizzes ) Show your love for us by sharing our.! Classify into capital or revenue i like-Accrual basis, Materiality, capital expenditure and. 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Mcqs are very helpful for the following is not a deferred revenue Trading account once. Go through this MCQ ’ S these expenses are unusually large in and. Conclusion and to clarify the following is not sponsored or endorsed by college... Acquiring the patent right for the business capital and revenue items ( quizzes ) Show your love for by! Introduce a new product in the … which one of tax law d is... College or university or product / preliminary exp purchase of office, equipment is an expenditure charged against ;. ’ S one of tax law quizzes ) Show your love for by. That part of government expenditure that a business can incur: 1 to introduce a new product the... Your love for us by sharing our contents shows page 49 - 51 of.

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