Accounting · Capital and Revenue Expenditure
Which of the following statements is correct regarding expenditure classification?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Legal fees paid to acquire a new property are treated as capital expenditure.✓
- 2The amount spent to reduce working expenses is treated as revenue expenditure.
- 3Money spent on overhauling a second-hand machinery purchased is treated as revenue expenditure.
- 4The amount spent by way of lawyer's fees to defend a suit claiming the firm's factory site is treated as capital expenditure.
Correct answer
Legal fees paid to acquire a new property are treated as capital expenditure.
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