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UPSC PYQPrelims 2022

Civil Services Examination · Question 9

With reference to the expenditure made by an organisation or a company, which of the following statements is/are correct? 1. Acquiring new technology is capital expenditure. 2. Debt financing is considered capital expenditure, while equity financing is considered revenue expenditure. Select the correct answer using the code given below:

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2
Show answer & explanation

Answer: (A) 1 only

Explanation

Acquiring technology creates a long-term asset, so it is capital expenditure. Debt and equity are sources of finance, not categories of expenditure.