Question

If a capital expenditure is treated as a revenue expenditure then

Answer 1

When a business makes a purchase, it's generally a capital expenditure or a revenue expenditure. Revenue expenditures are normal business expenses that use an asset, like cash, to produce a good or a service. On the other hand, capital expenditures are long-term assets that bring future benefit to the company. Incorrectly recording a capital expenditure has consequences for both financial and tax accounting.