question_answer

Giving reasons identify whether the following are final expenditure or intermediate expenditure:       [4]

(i) Expenditure on maintenance of an office building.

(ii) Expenditure on improvement of a machine in a factory.

Answer:

(i) Expenditure on maintenance of an office building is a final expenditure as it is used for final consumption purposes.

(ii) Expenditure on improvement of a machine in a factory is also a final expenditure as it increases the capital formation.