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What is the difference between revenue expenditure and capital expenditure?

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Question added by Muhammad FArrukh Maqsood , Senior Auditor , A&M Alansari Auditing
Date Posted: 2015/11/15
farag gouda elsayed
by farag gouda elsayed , accountant , التراث

capital expenditure is an amount spent to acquire or improve a long-term asset such as equipment or buildings. Usually the cost is recorded in an account classified as Property, Plant and Equipment. The cost (except for the cost of land) will then be charged to depreciation expense over the useful life of the asset.revenue expenditure is an amount that is expensed immediately—thereby being matched with revenues of the current accounting period. Routine repairs are revenue expenditures because they are charged directly to an account such as Repairs and Maintenance Expense. Even significant repairs that do not extend the life of the asset or do not improve the asset (the repairs merely return the asset back to its previous condition) are revenue expenditures. 

Abdul Waheed Khan
by Abdul Waheed Khan , Accountant , Hotel Raj International

Capital Expenditure is an expense generally made to acquire an asset or improve the capacity of the asset. Unlike Revenue Expenditure, which is an expense made for operating day-today activities of the business.

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