BTHM-Capital and Revenue Expenditure Financial Accounting-Topic 3
Topic 3-Capital and revenue expenditure
It follows that a business’ expenditure may be classified as one of the two types:
CAPITAL EXPENDITURE REVENUE EXPENDITURE
• Expenditure on current
• Expenditure on the
assets.
acquisition of non-
• Expenditure relating to
current assets required
running the business
for use in the business,
(such as administration
not for resale.
costs).
• Expenditure on
• Expenditure on existing
maintaining the earning
non-current assets
capacity of non-current
aimed at increasing
assets eg: repairs and renewals
their earning capacity
Capital expenditure is long Revenue expenditure relates to
term in nature as the business the current accounting period
intends to receive the benefits and is used to generate revenue
of the expenditure over a long in the business
period of time.
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Topic 3-Capital and revenue expenditure
It follows that a business’ expenditure may be classified as one of the two types:
CAPITAL EXPENDITURE REVENUE EXPENDITURE
• Expenditure on current
• Expenditure on the
assets.
acquisition of non-
• Expenditure relating to
current assets required
running the business
for use in the business,
(such as administration
not for resale.
costs).
• Expenditure on
• Expenditure on existing
maintaining the earning
non-current assets
capacity of non-current
aimed at increasing
assets eg: repairs and renewals
their earning capacity
Capital expenditure is long Revenue expenditure relates to
term in nature as the business the current accounting period
intends to receive the benefits and is used to generate revenue
of the expenditure over a long in the business
period of time.
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