Expenditure and income
‘’Income is the revenue a business earns from selling its goods and services or the money an
individual receives in compensation for his or her labor, services, or investments. An expenditure is
funds used by a business, organization, or corporation to attain new assets, improve existing ones, or
reduce a liability. In other words, it’s the use of a resource in the operations of a business.’’
Capital income
Capital income is the money that is invested by
the owners to set up the business by
purchasing items that will stay in the business
for long term such as the fixed assets including
premises, machinery, vehicles and equipment.
Capital income can also be spent on start-up
stock for the businesses, which they will require to begin operating and start generating revenue.
The source for capital income depends on the type of business it is. A sole trader is a small business
that is set up by one person, as an individual, without any assistance which means they are in control
of everything and are responsible for anything that happens to the firm. A sole trader may have to
invest their own personal savings into the business or borrow a loan from the bank as there are not
any other owners or directors with the business. A sole trader is limited on the sources that are
available to them and are also responsible for any debts which make sole trader a risky business
type; however, the sole trader gets to keep all the profits themselves. A partnership is a business
that is owned by more than one person, 22 people maximum. They start up and run the business
together such as making the decisions, agreeing on certain things and sharing the profit the
company makes.
In a partnership, each partner will invest in the business as the capital income, which means that the
business will have more capital income compared to a sole trader which makes partnership slightly
less risky type of business to start. In a company where there are shareholders such as limited
companies, all the shareholders contribute towards the capital income; they then receive their share
of the profits, this means there is more capital income. Businesses borrow loans for capital income
when starting up. Loans are usually a long-term way of borrowing funds; businesses can borrow
loans for several years. Businesses can also be charged with interest which they have to pay
depending on the amount they borrow. Businesses can also take out a mortgage, which is for more
money than a loan and for a longer time. Businesses may need a mortgage to buy premises for their
stores or factories. Mr Domineks gardening business is a sole trader type of business which means
he had to invest his own personal savings or had to borrow a loan from the bank, so if he does not
make enough profit or sales he will struggle to pay back to the bank and this will leave him in debt
which only he is responsible for.
Capital expenditure
Capital expenditure is incurred when a business spends money to either buy fixed assets or add to
the value of an existing fixed asset, it is the money that is spent on capital items at the start of a
business, such as the long term fixed assets; this includes the land in which the business opens
premises or the mortgages, machinery and vehicles. The capital expenditure also includes the
delivery charges on an asset, building charges for conveyancing, carriage inwards on machinery and
costs of bringing fixed assets to use. Capital expenditure is spent on fixed assets that help the
business run and operate properly and start generating revenue over time such as the buildings and
machinery. Capital expenditure also includes costs for repairs and maintenance for example
‘’Income is the revenue a business earns from selling its goods and services or the money an
individual receives in compensation for his or her labor, services, or investments. An expenditure is
funds used by a business, organization, or corporation to attain new assets, improve existing ones, or
reduce a liability. In other words, it’s the use of a resource in the operations of a business.’’
Capital income
Capital income is the money that is invested by
the owners to set up the business by
purchasing items that will stay in the business
for long term such as the fixed assets including
premises, machinery, vehicles and equipment.
Capital income can also be spent on start-up
stock for the businesses, which they will require to begin operating and start generating revenue.
The source for capital income depends on the type of business it is. A sole trader is a small business
that is set up by one person, as an individual, without any assistance which means they are in control
of everything and are responsible for anything that happens to the firm. A sole trader may have to
invest their own personal savings into the business or borrow a loan from the bank as there are not
any other owners or directors with the business. A sole trader is limited on the sources that are
available to them and are also responsible for any debts which make sole trader a risky business
type; however, the sole trader gets to keep all the profits themselves. A partnership is a business
that is owned by more than one person, 22 people maximum. They start up and run the business
together such as making the decisions, agreeing on certain things and sharing the profit the
company makes.
In a partnership, each partner will invest in the business as the capital income, which means that the
business will have more capital income compared to a sole trader which makes partnership slightly
less risky type of business to start. In a company where there are shareholders such as limited
companies, all the shareholders contribute towards the capital income; they then receive their share
of the profits, this means there is more capital income. Businesses borrow loans for capital income
when starting up. Loans are usually a long-term way of borrowing funds; businesses can borrow
loans for several years. Businesses can also be charged with interest which they have to pay
depending on the amount they borrow. Businesses can also take out a mortgage, which is for more
money than a loan and for a longer time. Businesses may need a mortgage to buy premises for their
stores or factories. Mr Domineks gardening business is a sole trader type of business which means
he had to invest his own personal savings or had to borrow a loan from the bank, so if he does not
make enough profit or sales he will struggle to pay back to the bank and this will leave him in debt
which only he is responsible for.
Capital expenditure
Capital expenditure is incurred when a business spends money to either buy fixed assets or add to
the value of an existing fixed asset, it is the money that is spent on capital items at the start of a
business, such as the long term fixed assets; this includes the land in which the business opens
premises or the mortgages, machinery and vehicles. The capital expenditure also includes the
delivery charges on an asset, building charges for conveyancing, carriage inwards on machinery and
costs of bringing fixed assets to use. Capital expenditure is spent on fixed assets that help the
business run and operate properly and start generating revenue over time such as the buildings and
machinery. Capital expenditure also includes costs for repairs and maintenance for example
