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With reference to the expenditure made by an organisation or a company, which of the following statements is/are correct

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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 :

(a)

1 only

(b)

Both 1 and 2

(c)

2 only

(d)

Neither 1 nor 2

Answer:

(a)

Application Based

Core Books/NCERT

Explanation

Statement 1 is correct: Capital expenditures deals with creation for acquisition of tangible or non-tangible assets new technology is a non-tangible asset. Statement 2 is wrong: Equity financial is not revenue expenditure. It is also a capital expenditure.