Question

a distinction is being made between capital expenditures and revenue expenditures​

Answer 1

Answer:

Capital expenditure is the money spent by a firm to acquire assets or to improve the quality of existing ones. Revenue expenditure is the money spent by business entities to maintain their everyday operations. Capital expenses are incurred for the long-term.

Explanation:

Answer 2

ANSWER :

❖ The main distinction between Capital Expenditures and Revenue Expenditures is :-

• ➲ Capital Expenditures are the expenditures incurred in acquiring fixed assets or inproving fixed assets of a business. While, Revenue Expenditures are the expenditures incurred for meeting the day to day business expenses.

❖ Some other differences between Capital Expenditures and Revenues Expenditures are as follows :-

• [1] Purpose : Capital Expenditures are incurred to purchase or use fixed assets. Whereas, Revenue Expenditures are incurred for meeting day to day bsuiness operations.

• [2] Capacity : Capital Expenditures increase the earning capacity of the business. On the other hand, Revenue Expenditures help in maintaining the present level of business.

• [3] Accounting Treatment : Capital Expenditures are shown at the Assets side of the Balance Sheet. Whereas, Revenue Expenditures are shown on the Debit side of Trading and Profit and Loss Account.

• [4] Period of Benefit : The benefit of Capital Expenditures is received over a number of year and is not restricted only to the year in which it is incurred. On the other hand, the benefit of Revenue Expenditures is received in the accounting period in which it is incurred.

• [5] Nature : Capital Expenditures are non-recurring in nature. Whereas, Revenue Expenditures are recurring in nature.