Distinguishing Expenditure Types for Accurate Accounting

Steps:

• Identify capital expenditure as long-term asset costs (e.g., machinery) depreciated over time.
• Identify revenue expenditure as short-term operating costs (e.g., repairs) expensed immediately.
• Recognize importance in financial reporting: affects profit calculation and tax liability.
• Determine correct choice based on key impact, which is depreciation and asset valuation.

Not enough information: Statements 1, 2, and 3 are not provided, making full analysis impossible.

Final answer: D