QUESTION 70
WHAT’S THE DIFFERENCE BETWEEN REVENUE EXPENDITURE AND CAPITAL EXPENDITURE?
Why it’s important: Revenue and capital items are treated differently in the organisation’s accounts.
Expenditure can be divided into two broad areas.
REVENUE AND CAPITAL EXPENDITURE:
Revenue expenditure is the day-to-day expenditure that the organisation incurs as it goes about its business of producing and selling goods and services. Revenue expenses include materials, heating, lighting, admin and management salaries, stationery, photocopying, etc. They are the daily costs of doing business and are charged to the organisation’s trading, profit and loss account.
Capital expenditure is incurred when the organisation buys an asset such as a new property, machinery ...
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