Capital

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Capital Revenue Expenditures
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Objective

• After this chapter, you will understand the
  following terms
• Capital expenditure and receipt
• Revenue expenditure and receipt
• Joint expenditure

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Capital expenditure

• Money spent by a firm on buying or adding value
  to a fixed asset.
• E.g. Acquiring fixed assets and any other cost
  needed to get the fixed assets ready for use.

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Revenue Expenditure

• Money spent by a firm for running the business on
  a day-to-day basis
• E.g. Petrol costs for a motor van

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Differences between two expenditures
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Incorrect Treatment of expenditure will lead to
distortion of both Balance Sheet figures and
Trading Profit Loss account figures.
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Joint Expenditure

• One item of expenditure needed to be divided
  between capital and revenue expenditure.

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Capital Revenue Receipts

• Capital Receipts are receipts from the sale of
  fixed assets.
• Revenue Receipts are receipts from the sale of
  goods and services, plus other revenue items from
  the operation of the business.

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THE END