Whenever payment and/or incurrence of an outlay are made for a purpose other than the settlement of an existing liability, it is called:

Expenditure

The correct answer is option 1- Expenditure.

Whenever payment and/or incurrence of an outlay are made for a purpose other than the settlement of an existing liability, it is called expenditure. The expenditures are incurred with a viewpoint they would give benefits to the business. The benefit of an expenditure may extend up to one accounting year or more than one year.

OTHER OPTIONS

Revenue- Revenue, also sometimes called sales or income, refers to the total amount of money a business brings in from its normal operations over a specific period.  

Provision- A provision is a charge against profit. It is created for a known current liability the amount of which is uncertain.

Reserve- A part of the profit may be set aside and retained in the business to provide for certain future needs like growth and expansion or to meet future contingencies such as workmen compensation. Reserves are the appropriations of profit to strengthen the financial position of the business.