Question: Sir, change of tires of a truck. is it capital or revenue expenditure? and in the ratio of return on common stock holder equity (if there is preferred dividends) we need to minus it from net income.but do we need to minus the price of those shares (preferred ones) from total common stock holders"equity to identify avg common stock holders equity??? and borrowing loans from bank .is it under the investing activity on cash flow statement??
Answer: Following are the answers to your questions.
1. Change of tires is a revenue expenditure as it will not change the original feature of the truck.
2. There is no preferred shares within "total common stock holders' equity". So, there is no need for any such deductions.
3. Borrowing money from banks or anyone else for long term is financing activity in cash flow statement.
Answer: Following are the answers to your questions.
1. Change of tires is a revenue expenditure as it will not change the original feature of the truck.
2. There is no preferred shares within "total common stock holders' equity". So, there is no need for any such deductions.
3. Borrowing money from banks or anyone else for long term is financing activity in cash flow statement.
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