Capital and revenue expenditure
Quiz by Tina Sandhu
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14 questions
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- Q1Which of the following is an example of capital expenditure?Paying monthly utility billsPurchasing a new delivery vanSalary payments for employeesBuying office supplies30s
- Q2What 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
- Q3Which 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
- Q4What 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
- Q5Which 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
- Q6What is the primary purpose of working capital in a business?To assess market shareTo invest in long-term assetsTo determine company profitabilityTo cover short-term liabilities30s
- Q7Which of the following is considered a component of working capital?InventoryLandBuildingsMachinery30s
- Q8What is the formula used to calculate working capital?Gross Profit - Operating ExpensesCurrent Assets - Current LiabilitiesTotal Assets - Total LiabilitiesNet Income - Expenses30s
- Q9What might happen if a business has negative working capital?It may struggle to meet its short-term obligationsIt will be able to invest more in new projectsIt will have higher profitsIt will automatically increase its market share30s
- Q10What is a major advantage of a sole proprietorship?Complete control over the businessAbility to raise capital through stockLimited liabilityEasy to transfer ownership30s
- Q11What is a significant drawback of a partnership?Shared profits among partnersSingle taxation on business incomeLimited liability for all partnersAbility to raise funds through stock30s
- Q12What is a primary feature of a non-profit organization?Distribution of profits to membersOwnership by shareholdersFocus on a charitable goal rather than profit generationTaxable corporate income30s
- Q13What is a key characteristic of a sole proprietorship?The owner is personally liable for all business debtsThe business can issue shares to raise capitalThe owner is protected from personal liabilityBusiness profits are taxed at a corporate rate30s
- Q14Which business structure requires formal registration and compliance with state regulations?LLC (Limited Liability Company)CorporationGeneral PartnershipSole Proprietorship30s