UPSC PRELIMS · ECONOMICS · CAPITAL AND REVENUE EXPENDITURE

With reference to the expenditure made by an organisation or a company, which of the following statements is/are correct? 1. Acquiring new technology is capital expenditure. 2. Debt financing is considered capital expenditure, while equity financing is considered revenue expenditure. Select the correct answer using the code given below:

Take a breath. Choose one. Press A–D on your keyboard if you like.

EXPLANATION

Acquisition of new technology creates a capital asset. Debt and equity financing are financing methods, not classified simply as capital versus revenue expenditure.

Ready for the real thing?

Battle other aspirants in timed 1v1 Prelims duels, climb the rating ladder and keep your daily streak. Free and ad-free.