Accounting for Non-current Assets and Depreciation: Chapter 6 Quiz

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Which of the following best describes revenue expenditure?

Expenditure on items that do not contribute to the revenue-earning capacities of a business and is expensed off immediately.

Expenditure on items that contribute to the revenue-earning capacities of a business and is capitalized over time.

Expenditure on items that do not contribute to the revenue-earning capacities of a business and is capitalized over time.

Expenditure on items that contribute to the revenue-earning capacities of a business and is expensed off immediately to match the revenues of the same accounting period. (correct)

What is the purpose of deducting revenue expenditure at the end of an accounting period?

To determine the profit for the accounting period. (correct)

To determine the total revenue earned in the accounting period.

To calculate the total assets at the end of the accounting period.

To calculate the total liabilities at the end of the accounting period.

Which of the following is considered an example of revenue expenditure?

Purchase of machinery for expanding production capacity.

Cost of renovating and extending the company's office building.

Purchase of land for long-term investment purposes.

Salary paid to employees for their work during the accounting period. (correct)

What does accumulated depreciation represent?

The total amount of depreciation expense charged on non-current assets since their acquisition. Signup and view all the answers

How is depreciation calculated using the straight-line method?

Depreciation is calculated as a fixed percentage of the original cost of the asset each year. Signup and view all the answers

What is the purpose of calculating and recording depreciation expense?

To accurately allocate the cost of non-current assets over their useful life. Signup and view all the answers

What is the purpose of depreciation in accounting?

To account for the reduction in value of non-current assets over time Signup and view all the answers

Where are revenue items typically dealt with in financial statements?

Statement of Profit or Loss and Other Comprehensive Income Signup and view all the answers

What is the main reason for not depreciating land?

It has an unlimited useful life Signup and view all the answers

What concept forms the basis for calculating and recording depreciation?

The historical cost concept Signup and view all the answers

Which expenditure contributes to the revenue-earning capacities of a business for more than one accounting period?

Capital expenditure Signup and view all the answers

In which statement are capital items typically dealt with?

Statement of Financial Position Signup and view all the answers

What factors can cause depreciation of buildings?

All of the above Signup and view all the answers

What is the purpose of capital items in financial statements?

To contribute to the revenue-earning capacities of a business for more than one accounting period Signup and view all the answers

What is the main reason for not depreciating land?

Land is not depreciated because it has an unlimited useful life. Signup and view all the answers

What concept forms the basis for calculating and recording depreciation?

The historical cost concept. Signup and view all the answers

Accounting for Non-current Assets and Depreciation: Chapter 6 Quiz

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Questions and Answers

Which of the following best describes revenue expenditure?

What is the purpose of deducting revenue expenditure at the end of an accounting period?

Which of the following is considered an example of revenue expenditure?

What does accumulated depreciation represent?

How is depreciation calculated using the straight-line method?

What is the purpose of calculating and recording depreciation expense?

What is the purpose of depreciation in accounting?

Where are revenue items typically dealt with in financial statements?

What is the main reason for not depreciating land?

What concept forms the basis for calculating and recording depreciation?

Which expenditure contributes to the revenue-earning capacities of a business for more than one accounting period?

In which statement are capital items typically dealt with?

What factors can cause depreciation of buildings?

What is the purpose of capital items in financial statements?

What is the main reason for not depreciating land?

What concept forms the basis for calculating and recording depreciation?

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