A company buys a mainframe computer for its head office and personal computers for its staff. Under the classification of capital items, which of the following statements is correct?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → The mainframe computer is an installation, while the personal computers are equipments.
Option (1) Both the mainframe computer and the personal computers are installations. — Incorrect. Personal computers are equipments, like hand tools and fax machines.
Option (2) The mainframe computer is an installation, while the personal computers are equipments. — Correct. Capital items are goods used in producing finished goods. Installations include elevators and mainframe computers, while equipments include hand tools, personal computers and fax machines.
Option (3) The mainframe computer is an equipment, while the personal computers are installations. — Incorrect. The two are reversed: the mainframe computer is the installation and the personal computers are equipments.
Option (4) Both the mainframe computer and the personal computers are equipments. — Incorrect. A mainframe computer is an installation, like an elevator.
NCERT (2026-27 Edition): “Classification The industrial goods are classified into the following major categories:” “(ii) Capital Items: These are such goods that are used in the production of finished goods. These include: (a) installations like elevators, mainframe Computers, and (b) equipments like Hand Tools, Personal Computer, Fax Machines, etc.” |