Question

Give one difference between capital expenditure and revenue expenditure

Answer 1

Revenue Expenditure

1. Its effect is temporary, i.e. the benefit is received within the accounting year.

Capital expenditure

1. Its effect is long-term, i.e. it is not exhausted within the current accounting year-its benefit is received for a number of years in future.

Answer 2

Capital expenditure is non recurring in nature.

Revenue expenditure is recurring in nature.

Capital expenditure increases the profit earning capacity of the business

Revenue expenditure maintains the earning capacity of the business..