Question

Distinguish between the following:

(a) ‘Cash Basis’ and ‘Accrual Basis’ of accounting

(b) ‘Capital Expenditure’ and ‘Revenue Expenditure’

Answer 1

Capital expenditure are those exp. which benefit is arising for more then 1 accounting period whereas revenue exp. are those which benefit is arising during the accounting period.
Cash basis accounting means only those transactions which are recieved or paid in cash whereas Accrual basis means thise transactions which has accrued whether cash is recieved or not.