Question
Giving reasons categorise the following into revenue expenditure and capital expenditure.
(i) Subsidies, (ii) Grants, (iii) Repayment of loan, and (iv) Construction of school building.
Solution
(i) and (ii) are revenue expenditure because they create neither assets nor reduce liability but (iii) and (iv) are capital expenditure since (iii) reduces liability and (iv) creates an asset.
