capital expenditure revenue expenditure

Capital expenditure and Revenue expenditure | differences and definition

Definition and difference between capital expenditure and revenue expenditure

A business incurs several expenditures during the year some of them are recurring in nature whereas others are non-recurring in nature. The non-recurring expenditure and recurring expenditure respectively called capital expenditure and revenue expenditure.

The capital expenditures treated as asset whereas revenue expenditures immediately treated as expenses and deducted from the revenues in the income statement. Capital expenditures increased the efficiency of the assets. And the revenue expenditures just maintain the original efficiency of the assets.

For e.g. capital expenditures include the purchase of the vehicle and any other assets, installation of new equipment’s, repair and maintenance of second hand vehicles or assets an so on.

For e.g. revenue expenditures includes salary, rent, wages, repairs, and maintenance, weighted washing of the building and so on.

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