[CBSE] Q 1 Solutions Financial Statements of Sole Proprietorship TS Grewal Class 11 (2023-24)

Solution of Question number 1 of the Financial Statements of Sole Proprietorship of TS Grewal Book class 11, 2023-24?

State whether the following expenses are capital or revenue in nature:

(i) Expenses on whitewhashing and painting of a building purchased to make it ready for use.

(ii) ₹ 10,000 spent on constructing platform for a new machine.

(iii) Repair expenses of ₹ 25,000 incurred for whitewashing of factory building.

(iv) Insurance premium paid as renewal premium.

(v) Purchased a new car.

(vi) GST paid on purchase of new machine.

(vii) Wages paid to install a machine.

(viii) Repairs carried out on existing car.

(ix) Office block of building repainted for ₹ 50,000.

(x) Paid telephone bill of ₹ 2,500.

[Capital Expense – (i), (ii), (v), (vi), (vii); Revenue Expense – (iii), (iv), (viii), (ix) and (x).]

Solution:-

I) Capital Expenses

Reason:- Expenses incurred on after purchasing an assets are included in the purchasing cost of the assets.

ii) Capital Expenses

Reason:- Expneses incurred on a new machine to make it usable is included in the purchasing cost of the assets.

iii) Revenue Expenses

Reason:- Expenses incurred in the maintenance of the old assets of the business are the Revenue Expenses.

iv) Revenue Expenses

Reason:- Insurance premium is the day to day expenses of the business.

v) Capital Expenses

Reason:- Expenditure incurred on purchasing a new assets are Capital expenses.

vi) Capital Expenses:-

Reason:- Expenditure incurred on purchasing a new assets are Capital expenses.

vii) Capital Expenses:-

Reason:- Expenditure incurred on a new machine to make it usable in business are included in the purchasing cost of the machine. thus installation charges of a new machine are Capital expenditures.

viii) Revenue Expenses:-

Reason:- Expenses incurred on maintenance of the existing assets are considered as day to day expenses of the business. Thus Repairs of existing car are Revenue Expenses.

ix) Revenue Expenses

Reason:- Expenses incurred on maintenance of the existing assets are considered as day-to-day expenses of the business. Thus expenses of repainted of office blocks are Revenue Expenses.

x) Telephone Bill:-

Reason:- Expenses on Telephone bill are day to day expenses of the business. Thus are Revenue Expenses.

Here is the list of all Solutions.

S.N	Solutions
1	Question – 1
2	Question – 2
3	Question – 3
4	Question – 4
5	Question – 5
6	Question – 6
7	Question – 7
8	Question – 8
9	Question – 9
10	Question – 10

S.N	Solutions
11	Question – 11
12	Question – 12
13	Question – 13
14	Question – 14
15	Question – 15
16	Question – 16
17	Question – 17
18	Question – 18
19	Question – 19
20	Question – 20

S.N	Questions
21	Question – 21
22	Question – 22
23	Question – 23
24	Question – 24
25	Question – 25