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Capital and revenue expenditure

Quiz by Tina Sandhu

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14 questions
Show answers
  • Q1
    Which of the following is an example of capital expenditure?
    Paying monthly utility bills
    Purchasing a new delivery van
    Salary payments for employees
    Buying office supplies
    30s
  • Q2
    What characterizes revenue expenditure?
    It leads to long-term asset acquisition.
    It is always a one-time expense.
    It results in capital gains.
    It is used for day-to-day operational costs.
    30s
  • Q3
    Which of the following best describes the difference between capital and revenue expenditure?
    Revenue expenditure is always greater than capital expenditure.
    Capital expenditure is for long-term investments while revenue expenditure is for short-term operational costs.
    Capital expenditure increases liabilities, revenue does not.
    Both types of expenditure are recorded in the same way.
    30s
  • Q4
    What is the main purpose of revenue expenditure?
    To cover the everyday operational costs of a business.
    To purchase new machinery and equipment.
    To invest in long-term assets.
    To increase the company's equity.
    30s
  • Q5
    Which of the following is an example of revenue expenditure?
    Renovating the office space.
    Buying a new computer for the office.
    Payment for office utilities.
    Purchasing company vehicles.
    30s
  • Q6
    What is the primary purpose of working capital in a business?
    To assess market share
    To invest in long-term assets
    To determine company profitability
    To cover short-term liabilities
    30s
  • Q7
    Which of the following is considered a component of working capital?
    Inventory
    Land
    Buildings
    Machinery
    30s
  • Q8
    What is the formula used to calculate working capital?
    Gross Profit - Operating Expenses
    Current Assets - Current Liabilities
    Total Assets - Total Liabilities
    Net Income - Expenses
    30s
  • Q9
    What might happen if a business has negative working capital?
    It may struggle to meet its short-term obligations
    It will be able to invest more in new projects
    It will have higher profits
    It will automatically increase its market share
    30s
  • Q10
    What is a major advantage of a sole proprietorship?
    Complete control over the business
    Ability to raise capital through stock
    Limited liability
    Easy to transfer ownership
    30s
  • Q11
    What is a significant drawback of a partnership?
    Shared profits among partners
    Single taxation on business income
    Limited liability for all partners
    Ability to raise funds through stock
    30s
  • Q12
    What is a primary feature of a non-profit organization?
    Distribution of profits to members
    Ownership by shareholders
    Focus on a charitable goal rather than profit generation
    Taxable corporate income
    30s
  • Q13
    What is a key characteristic of a sole proprietorship?
    The owner is personally liable for all business debts
    The business can issue shares to raise capital
    The owner is protected from personal liability
    Business profits are taxed at a corporate rate
    30s
  • Q14
    Which business structure requires formal registration and compliance with state regulations?
    LLC (Limited Liability Company)
    Corporation
    General Partnership
    Sole Proprietorship
    30s

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