Question

Expenditures made to extend an asset's life are called revenue expenditures.

True False

Answer 1

Expenditures made to extend an Asset's life are called revenue expenditures.

This is False.

Capital Expenditures:-

Expenditures which made to extend of useful life, expand or acquisition of an Asset are Called Capital Expenditures, they represent more investment of capital to expand or acquisition of long-term Assets. These Expenditures are not done on regular basis. These types of expenditures shows in Balance Sheet and Cash flow Statement. These are long-term expenditures.

Revenue Expenditures:-

Expenditures which made to meet the daily requirements of business to running production smoothly. These are Operational costs of a business to running day to day activities. Revenue Expenditures are short-term expenditures. These expenditures related to maintenance of Assets without extend their useful life. These expenditures shows in Income Statement. These expenditures related to repairing, maintenance or repainting expenses.