The correct answer is Capital expenditureCapital Expenditure: The expenditure which tends to increase the financial assets or reduce the financial liabilities are called Capital Expenditure. These are not of recurring nature. Capital Expenditure is incurred to increase the earning capacity of the business. Important Points Since Rs. 50,000 is spent on increasing the seating capacity of the business, this will, in turn, increase the earning capacity of the cinema hall. This will result in an increase in the value of assets. So this will be considered as Capital Expenditure. Additional InformationRevenue Expenditure: These are those expenditures that are incurred in the normal course of business. These expenditures are for the short term and are recurring in nature. These expenditures neither create any asset nor reduce any liability. For example- Salaries of the employees, Electricity bills, etc. Deferred Revenue Expenditure: The expenses which are incurred in present, but its benefits are expected to be received in the future is called Deferred Revenue Expenditure. This expense could be written off in the same fiscal year or several years. For Example- The amount spend on advertisement.