Key Differences Between Capital and Revenue Expenditure

The benefit generated by the revenue expenditure is for the current accounting year. The examples of revenue expenditure is as under – Wages & Salary, Printing & Stationery, Electricity Expenses, Repairs and Maintenance Expenses, Inventory, Postage, Insurance, taxes etc.

Capital Expenditure Vs Revenue Expenditure

The amount spent by the company for possessing any long term capital asset or to enhance the working capacity of any existing capital asset, or to increase its lifespan in order to generate future cash flows or to decrease the cost of production, is known as Capital expenditure. As a huge amount is spent on it, the expenditure is capitalized, i.e. the amount of expenditure is spread over the remaining useful life of the asset.

What iscapital expenditure and revenue expenditure

A capital expenditure

1.It 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. 

2.It is an expenditure which results in the acquisition of non-current asset or improvement in their earning capacity.

Journal Practice question 2

11.When supplier make sales on Credit

Debit	Receivable (Increase current Asset)
Credit	Sales Revenue (Increase income)

12.When customer return goods to supplier,the supplier record the following entry

Debit	Sales Return (decrease in income)
Credit	Receivable (decrease in asset)

What is Books of Prime entry

Books of Prime entry

*Books of Prime entry are the books in which we first record transactions.

*These are not accounts; they are simply books that records the details of a transactions, almost like a diary. 

*The firm will have a separate book for each kind of transaction. The type of the transaction will affect which book it, is entered into.

FA1 Practice question set 5

41 In Dalveer’s cash receipts book for the month of June the trade receivables column totalled $6,570.


What does this amount represent? 
A The amount invoiced to Dalveer’s customers during June 
B The amount owed by Dalveer’s customers at the end of June 
C The amount received from Dalveer’s customers during June 
D The amount of discounts given to Dalveer’s customers during June