Multiple choice

Heavy sales promotion expenses is an example of

  1. revenue expenditure

  2. capital receipt

  3. deferred revenue expenditure

  4. capital expenditure

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Heavy sales promotion expenses (like major advertising campaigns) often benefit multiple accounting periods even though paid in one lump sum. Such expenses are not fully charged to the year incurred but are spread over the periods that benefit from the promotion. This spreading treatment makes them deferred revenue expenditure, which is gradually written off over future periods. Revenue expenditure would be charged entirely to the current year.