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, are called capital expenditure and revenue expenditure.

Capital expenditures are treated as assets whereas revenue expenditures are 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 maintain the original efficiency of the assets.

For example, capital expenditures include the purchase of the vehicle and any other assets, installation of new equipment, repair and maintenance of second-hand vehicles or assets, and so on.

For example, revenue expenditures include salary, rent, wages, repairs, maintenance, weighted washing of the building, etc.