The ordinary repairs are called revenue expenditures (income statement expenditures). Revenue expenditures do not increase the capacity or efficiency of an asset or extend its useful life and are reported on the income statement as an expense in the period incurred.

A capital expenditure (balance sheet expenditure) is debited to an asset account because it increases the asset’s capacity or efficiency or extends the asset’s useful life. A capital expenditure is reported on the balance sheet as an asset.

As can also be understood from the information given the statements “The ordinary repairs are called revenue expenditures (income statement expenditures).” and “A capital expenditure is reported on the balance sheet as an asset.” are correct, so the correct answer is B. The statement  “Revenue expenditures are debited to an asset account because they increase the asset’s capacity or efficiency or extend the asset’s useful life.” is not correct, because “Revenue expenditures do not increase the capacity or efficiency of an asset or extend its useful life and are reported on the income statement as an expense in the period incurred.”. The statement  “A capital expenditure (balance sheet expenditure) does not increase the capacity or efficiency of an asset or extend its useful life and is reported on the income statement as an expense in the period incurred.” is not correct, either. “A capital expenditure (balance sheet expenditure) is debited to an asset account because it increases the asset’s capacity or efficiency or extends the asset’s useful life.”