Property taxes levied in the current fiscal year. B. IF YOU THINK THAT ABOVE POSTED MCQ IS WRONG. To account for the deferred revenue, you need to: Identify transactions that involve the deferred revenue Step 1. State whether the following expenditures are capital, revenue or deferred revenue. C Not an Expenditure. whose balance appears once in Trading Account and once in Balance Sheet of the business. 136. iii. 2. In conclusion and to clarify the following Questions is Deferred Revenue Expenditure: Legal expenses incurred in raising a loan. C) Debit a receivable and credit Fund Balance. Deferred Revenue Expenditure 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) ₹ … 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. A. They improve the financial position of the business. 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. Rs.1200 fire insurance for the building for business. A. 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. Therefore, Rs. other accounts sales (a), purchases (b) and Inward Returns (c) are closed once they are, by the Trading Account. We find that there is no concept of deferred revenue expenditure under the Income Tax Act except under certain specific, provisions like section 35D. Which of the following is not a deferred revenue expenditure? The expenditure incurred for the following purposes will be treated as revenue 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. D. Fines and licensing fees for which amounts cannot be budgeted. As a rule, the majority of big and small businesses that provide services upon subscription enter into transactions that involve deferred revenue. 53. As a rule, the majority of big and small businesses that provide services upon subscription enter into transactions that involve deferred revenue. We find that there is no concept of deferred revenue expenditure under the Income Tax Act except under certain specific, provisions like section 35D. [Hints: (c) A capital expenditure is a non- recurring expenditure whose benefit lasts for, one accounting period. The question of whether expenditure is capital or revenue for tax purposes is one of tax law. Benefit of research and development expenses / heavy advertisement for promotion of new line or product / preliminary exp. Revenue Expenditure is that expenditure which is not a capital expenditure. Deferred Revenue Expenditure Meaning. 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). A. It is written off over a period of certain years. Your email address will not be published. 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. 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.. accounting mcqs for accountant. b. revenue account. A D V E R T I S E M E N T. 4 Comments on . Renewal of magazine subscription fee Rs.75. 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. This preview shows page 49 - 51 out of 224 pages. Which of the following is not likely to be recorded in a special revenue fund? B Capital Expenditure. Which of the following is not a capital expenditure? Generally Accepted Accounting Principles, International Financial Reporting Standards. Differences Capital Expenditures and Revenue Expenditures. 2.Please give some examples for deferred revenue expenditure? Revenue Expenditure and 3. 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. Accounting Mcqs for Preparation of various Test announced by Fpsc, kppsc, Nts, ppsc. Tips for deferred revenue accounting. Revenue Expenditure is that part of government expenditure that does not result in the creation of assets. the amount will be written off over a subsequent number of years. (b) Registration fees paid at the time of registration of a building. Preliminary expenses paid in the formation of a company. Cost of experimenting with the chemical product which did not result in success These expenses are unusually large in amount and, essentially, the benefits are not consumed within the same accounting period. Tips for deferred revenue accounting. iv. Sometimes, some expenditure is of revenue nature but its benefit likely to be derived over a number of years. Multiple choice questions (MCQs) Chhavi sharma . deferred revenue expenditures Posted By G.S. Vasudevan gives you the following transactions in his business, classify into capital or revenue i. In business, Deferred Revenue Expenditure is an expense which is incurred while accounting period. 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. Reply. Revenue expenditure does not increase the efficiency of the firm. 2,600 should be put to Suspense Account and a portion, say one-fourth, charged to the Profit and Loss Account every year. 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. This expenditure might be written off in the same financial year or over a period of a few years. State whether the following expenditures are capital, revenue or deferred revenue. Reply. I will explain it with an example. I am writing this answer assuming you have basic knowledge of Fundamental terms like-Accrual basis, Materiality, Capital expenditure and Revenue expenditure. D. Legal expenses incurred in defending a suit for breach of contract to supply goods. 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. 137. 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. (i) The cost of an asset Rs.23,000 has been taken as an expense 13,960 plus Rs. Back to: Capital and revenue items (quizzes) Show your love for us by sharing our contents. D) Debit a receivable and credit revenue ... Revenue or Expenditure. ii. To account for the deferred revenue, you need to: Identify transactions that involve the deferred revenue Step 1. Which of the following statements is true? At the time of Registration of a building or in one period of certain years an one-time whose. … which one of tax law 224 pages this document helpful accounting period in the.. 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