Is purchase of machinery an intermediate expenditure?

Is purchase of machinery an intermediate expenditure?

No, it is not included in intermediate consumption. This is because purchase of machinery is a fixed asset.

Which one of the following is intermediate expenditure?

Reason: Expenditure on maintenance by a firm is an intermediate expenditure as the things purchased for repair and maintenance are used up during the period of one year.

Is expenditure on maintenance of building included in national income?

Answer: (i) Expenditure on maintenance of a building will not be included in the National Income because it is not adding anything in capital formation. (ii) Expenditure on adding a floor to the building will be included in the National Income because it is a part of domestic capital formation.

What type of expenditure is repairs?

Revenue expenses related to existing assets include repairs and regular maintenance as well as repainting and renewal expenses. Revenue expenditures can be considered to be recurring expenses in contrast to the one-off nature of most capital expenditures.

Are machinery intermediate goods?

For example, purchases of building, machinery, etc. are not intermediate purchases (if they are not meant for resale) as their value is not included in the value of final good. In fact, such purchases are termed as final products as they are purchased for investment.

Which of the following expenditures incurred are on intermediate products and which are on final products you must state reason for your answer?

Which of the following expenditures incurred are on intermediate products and which are on final products? You must state reason for your answer: (i) Purchase of ticket for train journey by an individual. (iii) Purchase of a car by an employer for office use by his employees.

What are intermediate goods examples?

Examples. Steel – a raw material used in the production of many other goods, such as bicycles. Car engines – Some firms make and use their own, others buy them from other producers as an intermediate good, then use them in their own cars. Paint, plywood, pipe and tube, and ancillary parts.

Are intermediate goods?

Intermediate goods are products that are used in the production process to make other goods, which are ultimately sold to consumers. The intermediate goods are sold industry-to-industry for resale or to produce other products.

What is final expenditure and intermediate expenditure?

Expenditure on maintenance of office building is an input in the production of final good. So, this will be treated as intermediate expenditure. Expenditure on improvement of machinery in a factory is an addition to the existing capital. So, this will be treated as final expenditure.

How would you find out whether a particular expenditure is expenditure on intermediate goods or on final goods?

If the expenditure on a product is meant for further production of goods and services or for resale then it is the expenditure on intermediate goods. But if the expenditure on a particular good is for private consumption or investment then it is the expenditure on final good.

Is maintenance an operating expense?

All operating expenses are recorded on a company’s income statement as expenses in the period when they were incurred. General repairs and maintenance of existing fixed assets such as buildings and equipment are also considered operating expenses unless the improvements will increase the useful life of the asset.

Is repairs and maintenance an expense?

Repairs and maintenance are expenses a business incurs to restore an asset to a previous operating condition or to keep an asset in its current operating condition.