Question

capital expenduture and revenue expenduture differences

Answer 1

capital expenditure means money spent by a business or organization on acquiring or maintaining fixed assets, such as land, buildings, and equipment...


revenue expenditure is an amount that is expensed immediately—thereby being matched with revenues of the current accounting period. Routine repairs are revenue expenditures because they are charged directly to an account such as Repairs and Maintenance Expense...

Hope this helps!!!

Answer 2

Capital expenditure can be easily defined as money spent for purchase or creating of long-term assets such as building, furniture, machines, vehicles, etc. The expenditure made on the capital items is spread over several years. The capital items are charged depreciation for the time it is used.

Capital expenditure increases the earning capacity of the organization. Capital expenditure always appears on the assets side of the balance sheet. Expenditure on capital items may represent the acquisition of any tangible or intangible fixed assets for future benefits. The benefits arising out of capital expenditure lasts for more than one accounting period.

Revenue expenditure can be easily defined as the costs incurred for the day to day expenses of carrying on the functions of business such as rent, wages, stationary, insurance, etc. Revenue Expenditure is an expense in the Profit and Loss account. The expenses which are incurred by the organization in setting the fixed assets in proper condition by maintenance and restoration activities are termed as Revenue Expenditures.The expenses for Ordinary maintenance and repairs of machinery are also classified as Revenue Expenditures. The expenses incurred for the purchasing of goods for resale and selling and distribution of the goods also comes under Revenue Expenditure.