Custome search engine

Saturday, 11 March 2017

What is the difference between Capital & Revenue expenditure

Capital expenditure is expenditure made to acquire or improve long term assets that are used by the business. Examples include the following:
  1. Purchase of property,
  2. Plant and equipment,
  3. Office equipment;
  4. Motor vehicles; 
  5. Installation costs associated with new equipment; 
  6. Improvements and additions to existing non-current assets (for example, building extensions, installation of air-conditioning etc.)
  7. Fees paid to raise long term finance are also deemed to be capital in nature.

  8. To pay fees associated with raising long term finance 


Revenue expenditure is expenditure on day-to-day operating expenses. Examples include:



1.Purchase of goods meant for resale in the normal course of business.
2.Purchase of raw materials and components used to manufacture goods for resale in the normal     course of business.
3.Expenditures made to meet the day to day running costs of a business (for example, rent, energy, 4.wages etc.)
5.Expenditures made to repair non-current assets.
6.Expenditures made to distribute goods to customers.
7.Costs of administering a business (for example, accounting services, license fees etc.)
8.Revenue expenditure is reported as expenditure in the statement of comprehensive income.

No comments:

Post a Comment