Accounting for depreciation Flashcards
1
Q
Define capital expenditure?
A
- Acquisition of non current assets or an improvement in their earning capacity
- Expenditure is written of in the income statement
2
Q
Define revenue expenditure?
A
- Incurred for the purposes of the business trade or to maintain the existing capacity of non current assets
- The expenses are written of income statement
3
Q
Main standard for tangible assets for sole traders is?
A
- IAS 16- property, plant and equipment
4
Q
What does DEAD CLIC stand for?
A
Debit entry will increase
Expenses
Assets
Drawings
Credit entry will increase
Liability
Income
Capital
5
Q
NetBook value
A
The cost minus accumulated depreciation
6
Q
Residual value
A
The estimated value of sale at the end of the assets useful life
7
Q
Depreciation formaula
A
(Cost - Residual value) * Number of years useful life
8
Q
A