Go AD-Free with CAclubindia Pro and Daily WhatsApp Updates. Subscribe Now!

Capital expenditure

746 views 1 replies

narasimha murty

Managing partner

54 Points Joined September 2009

How does a company use revenue reserves for capital expenditure?

If revenue reserves were not sufficient to meet capital expenditure and directors lent money to meet such shortfall how does the company repay the debt?

Replies (1)

Guest

The company can repay that debt in Installment or by any other payment methods from the Future revnue profits or Capital receipts. It is not compulsory that, the company has to pay from the Revnue profits/reserves only.

Because Directors money given to the company is considered as a loan, and the loan can be repaid by either Capital or revnue profits.