Question

Differentiate between the Capital and Revenue Expenditure on the basis of purpose, earning capacity and placement in financial statements.

Answer 1

Heya mate..

⚫On the basis of purpose , capital expenditure is incurred for acquisition of fixed assets for use in business. But revenue expenditure is incurred for running of business.
⚫On the basis of earning capacity, capital expenditure increases earning capacity of the business. But revenue expenditure is done for earning profits.
⚫On the basis of placement, capital expenditure is debited to related asset account. But revenue expenditure is debited to related expense account.

Hope it helps✌