Accounting for Revenue and Capital Expenditures

Subsequent expenditures made on property, plant, and equipment can be in the form of either capital or revenue expenditures. As we noted, the distinction between the two is often hazy and depends on the accounting policies developed by management. However, the distinction is important because it affects the determination of current and future periods’ income. … Read more

Capital vs Revenue Expenditures

What Is the Expenditure? Throughout accounting, we have used the term expenditure to refer to payment of an asset or the incurrence of liability in exchange for another asset or for a service rendered. Capital Expenditure The expenditure is made in cash or on credit and results in the firm’s receiving another asset, such as … Read more

Rules for Determining Revenue Expenditures

Revenue Expenditures There is a difference between “Income” & “Revenue“. Income of any form is called Revenue, whereas, Revenue represents any income or expenditure. Revenue expenditures refer to the amount spent on routine expenses of the business e.g. salaries paid to employees, Rent of office paid etc. As revenue expenditure provides benefits for the current … Read more

Capital and Revenue Expenditures

There are two main types of expenditures in business: Capital expenditures Revenue expenditures This article provides a brief overview of capital and revenue expenditures and offers definitions. Capital Expenditures Definition and Explanation of Capital Expenditures An expenditure is a capital expenditure if the benefit of the expenditure extends to several trading years. Capital expenditure may … Read more

Difference Between Capital and Revenue Expenditures

It is not easy to decide whether a particular expenditure is of capital nature or that of revenue. Some expenses may lie on borderline and difficulty arises in deciding whether these are capital or revenue. This difficulty can easily be removed by answering the following questions: Does the expenditure incurred in acquiring a fixed asset? … Read more

Revenue Expenditure Items Becoming Capital Expenditures

This article highlights important examples of revenue expenditure items that, under certain circumstances, become items of capital expenditure. Legal Charges Generally, legal charges are revenue expenses. However, legal charges paid in connection with the purchase of property or other fixed assets such as land, buildings, furniture, machinery, and patents are items of capital expenditure. This … Read more

Capital and Revenue Payments

Definition Expenditure is the full amount incurred by a business concern, whether paid or not, while the term “payment” refers to the amount actually paid. Payments come in two types: Capital payments Revenue payments Capital Payments Capital payments are the amounts actually paid on account of some capital expenditures. Example Furniture is purchased from Wild … Read more

Capital and Revenue Receipts

Receipts are the amounts actually received. The receipts of business are of two kinds: Capital receipts Revenue receipts Capital Receipts Explanation: Capital receipts include the following: Receipts from the sale of fixed assets of a business. Payments into the business made either by Proprietor of business or by shareholders of a company to start a … Read more