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    Question

    Which one of the following is treated as revenue

    expenditure?
    A Purchase of a new factory building Correct Answer Incorrect Answer
    B Cost of routine repairs to machinery Correct Answer Incorrect Answer
    C Purchase of a patent (long-term) Correct Answer Incorrect Answer
    D Addition to plant and machinery by capitalizing cost Correct Answer Incorrect Answer

    Solution

    Routine repairs maintain an asset in its working condition and are expensed in the period they are incurred (revenue expenditure). The other options involve acquiring or enhancing long-term assets and are thus capital expenditures.

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