UPSC CSE Prelims
Question 98
With reference to the expenditure made by an organisation or a company, which of the following statements is/are correct ?
- Acquiring new technology is capital expenditure.
- Debt financing is considered capital expenditure, while equity financing is considered revenue expenditure.
Select the correct answer using the code given below :
View correct answer and explanation
Correct answer: A
Correct Option: A (1 only)
Explanation: Buying new technology creates/strengthens a long-lived intangible or capital asset; raising debt or equity is a financing transaction, not automatically an expense category.
Statement / Pair / Item-wise Analysis:
1. True / qualifies - Acquiring a qualifying lasting technology asset is capital expenditure rather than an ordinary recurring operating cost.
2. False / does not qualify - Borrowing debt and issuing equity raise finance; neither is inherently a company’s capital/revenue expenditure.
Option-wise Analysis:
A. Correct-selects exactly the correct statements/items identified above.
B. Incorrect-includes 2 even though Borrowing debt and issuing equity raise finance; neither is inherently a company’s capital/revenue expenditure.; omits 1 even though Acquiring a qualifying lasting technology asset is capital expenditure rather than an ordinary recurring operating cost.
C. Incorrect-includes 2 even though Borrowing debt and issuing equity raise finance; neither is inherently a company’s capital/revenue expenditure.
D. Incorrect-omits 1 even though Acquiring a qualifying lasting technology asset is capital expenditure rather than an ordinary recurring operating cost.