Question

Write down the points of distinction between Capital Expenditure and Revenue Expenditure?

Answer 1

The following are the points of distinction between Capital and Revenue Expenditure:
(a) Capital expenditure results in bringing or acquiring a fixed asset into existence whereas Revenue expenditure is incurred for the upkeep of fixed assets.
(b) Capital expenditures benefits extend to more than one year whereas revenue expenditures benefits extend to only one year.
(c) Capital expenditure increases the earning capacity of the business whereas revenue expenditure is incurred to earn profits.