Question

10&11)

Question 10 2 pts When old equipment is traded in for a new equipment, the difference between the list price and the trade in allowance is called boot. True False Question 11 2 pts Which of the following is an example of a capital expenditure? cleaning the carpet in the front room tune-up for a company truck replacing an engine in a company car replacing all burned-out light bulbs in the factory

Answer 1

Solution. 10)The given statement is True.

Explanation: When old equipment is traded in for a new equipment, the value added to make the value of new equipment equal is called boot.

11)The correct answer is option c)replacing an engine in a company car.

Explanation: Option a)cleaning the carpet in the front room; b)tune-up for a company truck; d)replacing all burned-out light bulbs in the factory does not signify capital expenditure as they are under operating expenses of an organization for smooth working of its day to day activities and can be called revenue expenditure. Option c)replacing an engine in a company car enhances its capacity and acts as a capital expenditure.