ex. of revenue expenditure
Answers
Explanation:
When you’re running your SaaS business, dealing with a huge glossary of financial terms daily, it’s to be expected that you might occasionally get two terms with similar meanings mixed up. You might confuse your deferred revenue with your fulfilled revenue or with your backlog, for instance. They’re easy mistakes to make, but they can have serious unintended consequences for your business.
The difference between revenue expenditures and capital expenditures is another example of two similar terms that are easily mixed up. Understanding how each should be tracked can mean big savings over time and should be a firm part of your accounting strategy.
What is a revenue expenditure?
Revenue expenses are incurred when a company purchases products or services necessary for generating revenue in the short term. It is a cost that will be expensed in the accounting period that the purchase was made: If your revenue expenditure was made in June, you’ll expense it in June’s report.
For example, if Company A spends $1,000 per month on updates for a key piece of software used by each team member each month, then the $1,000 is a revenue expenditure in Company A’s monthly statement. If Company B has to spend $400 per month on replacement components for its production line, then that $400 counts as a revenue expenditure for that month.
Furthermore, the full price of both examples ($12,000 and $4,800, respectively) can be deducted from each company’s taxes the year they pay for the goods in question.