With reference to the expenditure made by an organisation or a company, which of the following statements is/are correct? 1. Acquiring new technology is capital expenditure. 2. Debt financing is considered capital expenditure, while equity financing is considered revenue expenditure. Select the correct answer using the code given below:

Answer: A. Only Statement 1 is correct. Statement 1 is CORRECT. Acquiring NEW TECHNOLOGY is CAPITAL EXPENDITURE. Capital expenditure creates assets or reduces liabilities of a long-term nature. Technology (patents, software licenses, hardware) is a capital asset providing benefits over multiple years and is capitalised on the balance sheet, then depreciated/amortised over its useful life. Statement 2 is WRONG. Both DEBT FINANCING (issuing bonds, taking loans) and EQUITY FINANCING (issuing shares) are FINANCING ACTIVITIES, NOT EXPENDITURES. They appear on the LIABILITIES/EQUITY side of the balance sheet, not as expenses. Categorising them as 'capital expenditure' or 'revenue expenditure' is incorrect — they are sources of financing, not uses of financing. The interest paid on debt is a revenue expense, but the principal raising itself is a financing activity. Source: NCERT Class 11 Accountancy / Ind AS / standard corporate finance texts.