question_answer

Should the following be treated as final expenditure or intermediate expenditure? Give reasons for your answer.

(i) Purchase of furniture by a firm.

(ii) Expenditure on maintenance by a firm.

Answer:

(i) Purchase of furniture by a firm is a final expenditure because firm does not invest on the furniture daily. So it is a kind of investment.

(ii) Expenditure on maintenance by a firm is an intermediate expenditure because it occurs again and again and is not of permanent nature.