Capital Expenditure Capital expenditure includes costs incurred on the acquisition of a fixed asset and any subsequent expenditure that increases the earning capacity of an existing fixed asset. Unit - 4 By Radhika Faculty Member J.H.Bhalodia Women’s College 2. Amount received from IDBI as a medium term loan for augmenting working capital. 1. This is the basis of classification between revenue expenditure and capital expenditure. A capital expenditure is an amount spent to acquire or significantly improve the capacity or capabilities of a long-term asset such as equipment or buildings. May 6, 2017 at 3:18 pm. An expenditure that neither creates assets nor reduces a liability is categorised as revenue expenditure. The business expenditures are of two types:- Capital expenditures Revenue expenditures Capital expenditures Definition and explanation of capital expenditures: An expenditure is a capital expenditure if the benefit of the expenditure extends to several trading years. 2 Page 3 Capital expenditure Vs Revenue expenditure CA CPT Course Paper 1 Fundamentals of Accounting Chapter 2 Unit 6 CA. The expenditure incurred in the running or the management of the business is known as the revenue expenditure. Revenue Expenditure and Capital Expenditure of India! The primary difference between Capital Receipts vs Revenue Receipts is that Capital receipts are the receipts of non-recurring nature which either creates the liability of the company or reduces the company’s assets whereas revenue receipts are the receipts of recurring nature and are reported in the statement of income of the company. Capital and Revenue Profit = Receipts – Expenses Periodicity concept Matching concept Accrual concept while determining profit / loss made during a particular … Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. In this BeeBusienssBee video I look at the topic of Capital and Revenue Expenditure. Difference Between Capital Expenditure and Revenue Expenditure Difference Between Turnover and Revenue Difference Between Sales and Revenue Difference Between Revenue Reserve and Capital Reserve Difference Between Revenue, Profit and Income Difference Between Revenue and Profit. Comments. (c) Capital expenditures (d) Revenue expenditures 19. 2,500 spent on the overhaul of machines purchased second-hand. the length of time the company HCA 311 professional tutor / hca 311dotcom - Hca 311 entire course for more course tutorials visit www.hca311.com hca Capital and Revenue Expenditure All exp. What is a capital expenditure versus a revenue expenditure? the benefit is received within the accounting year. The distinction between the nature of capital and revenue expenditure is important as only capital expenditure is included in the cost of fixed asset. and receipts of a business can broadly be divided into two groups, viz. If it creates an asset or reduces a liability, it is categorised as capital expenditure. Revenue Expenditure: Capital Expenditure: 1. (a) Capital expenditures (b) Revenue expenditures (c) Capital receipt (d) Revenue receipt 20. Its effect is temporary, i.e. Unit 4 Capital and Revenue Expenditure 1. Capital and Revenue eg. Definition of Capital Expenditure. (a) Capital expenditure (b) Revenue expenditure For example, the cost of the repairs of machinery is a revenue expenditure. A major difference between a capital expenditure & a revenue expenditure is - . Anchal Bansal says. K. 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