Expenditure incurred to maintain an asset's earning capacity is called

Assessment: WAEC SSCE - Financial Accounting - 1995 (Objective) Subject: Financial Accounting

Question 1 Report

Expenditure incurred to maintain an asset's earning capacity is called
Answer Details
Expenditure incurred to maintain an asset's earning capacity is called revenue expenditure. This type of expenditure is incurred in the normal course of business to keep an asset in good working condition and maintain its earning capacity. It is not intended to increase the asset's lifespan or earning potential, but rather to ensure that the asset continues to generate revenue as expected. Examples of revenue expenditures include repairs and maintenance, salaries and wages, utility bills, and advertising expenses.
Read lesson note on Nature And Significance Of Accounting (JAMB)
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