Question

distinguish between revenue expenditure and capital expenditure.
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Answer 1

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Capital Expenditure

• Capital expenditure is the money spent by a firm to acquire assets or to improve the quality of existing ones.

• Capital expenses are incurred for the long-term.

• These expenditures serve the purpose of increasing the capacity or capabilities of the long term asset by either enhancing or adding new assets to the organisation.

• Enhances the value of an existing asset.

• Non-recurring in nature

• Availability of Capitalisation:- Yes

• It appears as assets in the balance sheet and some portion in the income statement

Revenue Expenditure

• Revenue expenditure is the money spent by business entities to maintain their everyday operations.

• These are expenditures which neither help in the creation of asset nor they help in reducing the liabilities of a business.

• Does not enhance the value of an existing asset

• Do not have a physical presence.

• Recurring in nature.

• Availability of Capitalisation:- No

• It always appears in the Income statement.

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Answer 2

Answer:

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