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