Q9 · UPSC Prelims 2022 · Set A · Economy

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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 2 only
C Both 1 and 2
D Neither 1 nor 2

Correct answer: (a) 1 only

Explanation

  1. A

    1 only

    1 only. Buying new technology is capital expenditure. Debt vs equity finance is a funding choice, not capex vs revenue.

  2. B

    2 only

    2 only. Financing route does not classify the spend.

  3. C

    Both 1 and 2

    Both. Statement 2 fails.

  4. D

    Neither 1 nor 2

    Neither. Statement 1 is standard accounting.

Summary. Official key is (a) 1 only. Acquiring technology that yields benefits over years is capital expenditure. How you fund it — debt or equity — is not itself capex or revenue expenditure.

Same topic · past papers

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These previous-year questions sit on the same topic. Open one to practise the earlier ask.

  1. 2026 · Q93 · General Studies · 2 marks

    Which of the following statements about M1xchange's role in Micro, Small & Medium Enterprises (MSMEs) financing is/are correct? 1. M1xchange provides collateral based loans to MSMEs. 2. M1xchange facilitates discounting of invoices and Bills of Exchange for MSMEs. 3. M1xchange functions as a credit rating agency for MSMEs. Select the answer using the code given below:

    View answer →

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