Question

Is it really necessary to distinguish between revenue and capital expenditure in the context of presenting financial statements?

Answer 1

Capital expenditure - -

1* They are incurred in acquisition of fixes assets.

2* These expenses increase the value of assets.

3*These are related to installation of fixed assets.

4* They increase the earning capacity of the business

5* They are non. Recurring in nature.

Revenue expenditure

1*They are related to raw material acquired for business.

2*They donot increase the value of assets.

3*They are related to day to day running expenditure.

4* These maintain the earning capacity of the business.

5* They are recurring in nature..


Yes it is necessary to distinction between revenues and capital expenditure in presentation of financial statement