Capital and Revenue Expenditure

Capital Expenditure

Capital Expenditure is made when business spends money to buy fixed assets or add value to an existing fixed assets.

In general terms, any costs acquired to bring fixed assets in actions are included as capital expenditure. Such actions should include,
1) acquiring fixed assets.
2) bringing them into the business or firm.
3) legal costs of buying buildings.
4) carriage inwards on machinery bought.
5) any other cost needed to get the fixed asset ready for use.
(Business Accounting, Wood F and Sangster A)

Revenue Expenditure

Revenue Expenditure are paid to run the daily activities of the business.

PS: This topic should not be looked down as something that is not going to come out in the exam.

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