Difference between Capital, Revenue and Deferred
Revenue Expenditure
Capital Expenditure
Incurred on purchase of Tangible and intangible assets.
Increases the earning capacity of business.
Benefit spreads to a number of accounting period.
Eg:-purchase of Plant and machinery, furniture, computer, land and building,
goodwill, trademark, patent etc.
Revenue Expenditure
Incurred on day to day business activities.
Does not increases the earning capacity of business.
Benefit limits to current accounting period.
Eg:-purchase of raw material, payment of wages, salaries, courier expenses, audit
fees, office rent etc.
Deferred Revenue Expenditure
Partly capital and partly revenue in nature.
Benefit spreads to a few accounting period.
Eg:-A large amount spent on advertisement if benefits the business for a few
number of years will be considered as Deferred Revenue Expenditure.
Revenue Expenditure
Capital Expenditure
Incurred on purchase of Tangible and intangible assets.
Increases the earning capacity of business.
Benefit spreads to a number of accounting period.
Eg:-purchase of Plant and machinery, furniture, computer, land and building,
goodwill, trademark, patent etc.
Revenue Expenditure
Incurred on day to day business activities.
Does not increases the earning capacity of business.
Benefit limits to current accounting period.
Eg:-purchase of raw material, payment of wages, salaries, courier expenses, audit
fees, office rent etc.
Deferred Revenue Expenditure
Partly capital and partly revenue in nature.
Benefit spreads to a few accounting period.
Eg:-A large amount spent on advertisement if benefits the business for a few
number of years will be considered as Deferred Revenue Expenditure.
