MAPLE LEAF INTERNATIONAL SCHOOL
Date: 1st November 2025
Study Notes
Chapter12: Capital Expenditure & Revenue
Expenditure
Study Note: 3 Subject: Accounting
Subject Code:
Session: January 2025 (Girls)
4WAC1/01
Term: Final Examination 2025
©Maple Le af I n ter n ation al S cho ol 1|Page
, MAPLE LEAF INTERNATIONAL SCHOOL
Capital Expenditure:
Capital expenditure occurs when a business spends money to:
• Buy non-current assets
• Add to the value of an existing non-current asset.
Capital expenditure costs include the following:
o The costs of acquiring non-current assets
o The costs of bringing non-current assets into the business
o The legal cost of buying premises
o The carriage inwards (cost of transport) on machinery/equipment purchased
o Any other cost involved in preparing the non-current asset for use, e.g. installation
o Upgrades to existing machine.
Example: Rahul buys a new van for $ 15,000 and then he adds extra blind spot glasses costing
$200. Therefore, the total capital expenditure for his van is $ 15,200.
* Capital expenditure is a part of the Statement of financial position.
Capital Receipts:
Capital receipts are the sale of non-current assets. They should not be included in the business’s
revenue as they are not the normal day-to-day sales of the business. These transactions should be
recorded as cash or bank. Only the profit or loss made on the sale of non-current assets should be
included in the income statement.
Revenue Expenditure:
Revenue expenditure is incurred in either:
• Running the business on a day-to-day basis;
• Maintaining the existing capacity of non-current assets.
Example: Repainting the old building after three years.
Repair to van
* Revenue expenditure is a part of the Statement of Comprehensive Income.
©Maple Le af I n ter n ation al S cho ol 2|Page
, MAPLE LEAF INTERNATIONAL SCHOOL
Revenue Receipt:
Revenue receipts are receipts from the normal trading activities of the business. They include selling
inventory to customers. They are included in revenue on the income statement.
Incorrect treatment of Capital Expenditure & Revenue Expenditure:
If capital expenditure is incorrectly treated as revenue expenditure or vice-versa, then both the income
statement and statement of financial position will be incorrect. Profit for the year in the income statement
will be inaccurate as expenses will be overcast/undercast and the statement of financial position will not
show the true & fair position of the business as the value of the non-current asset will be
overcast/undercast.
Example: A bookkeeper posts the purchase of a photocopier to the stationery account. The purchase of
the photocopier should have been posted to the office equipment account.
In this example, capital expenditure has been incorrectly posted to revenue expenditure, so:
• Profit for the year will be understated
• The statement of financial position values will not include the value of the asset.
Distinguishing between Capital Expenditure & Revenue Expenditure:
Transactions Capital Revenue
Buying a Delivery Van X
Buying petrol for Van X
Putting extra headlights for Van X
Painting outside of a brand-new building X
Repainting the same building three years X
later
For further details see – [IGCSE9-1 -Chapter 12; Frank Wood: Chapter 20]
©Maple Le af I n ter n ation al S cho ol 3|Page
, MAPLE LEAF INTERNATIONAL SCHOOL
Date: 28th October 2025
Study Notes
Chapter14: Financial Statements (without adjustments)
Study Note: 1 Subject: Accounting
Session: January 2025 (Girls) Subject Code: 4WAC1/01
Term: Final Examination 2025
For further details see – [Frank Wood; Ch. – 7,8 & 9]
©Maple Leaf In t er na tion al S cho ol
P a g e 1 |6
Date: 1st November 2025
Study Notes
Chapter12: Capital Expenditure & Revenue
Expenditure
Study Note: 3 Subject: Accounting
Subject Code:
Session: January 2025 (Girls)
4WAC1/01
Term: Final Examination 2025
©Maple Le af I n ter n ation al S cho ol 1|Page
, MAPLE LEAF INTERNATIONAL SCHOOL
Capital Expenditure:
Capital expenditure occurs when a business spends money to:
• Buy non-current assets
• Add to the value of an existing non-current asset.
Capital expenditure costs include the following:
o The costs of acquiring non-current assets
o The costs of bringing non-current assets into the business
o The legal cost of buying premises
o The carriage inwards (cost of transport) on machinery/equipment purchased
o Any other cost involved in preparing the non-current asset for use, e.g. installation
o Upgrades to existing machine.
Example: Rahul buys a new van for $ 15,000 and then he adds extra blind spot glasses costing
$200. Therefore, the total capital expenditure for his van is $ 15,200.
* Capital expenditure is a part of the Statement of financial position.
Capital Receipts:
Capital receipts are the sale of non-current assets. They should not be included in the business’s
revenue as they are not the normal day-to-day sales of the business. These transactions should be
recorded as cash or bank. Only the profit or loss made on the sale of non-current assets should be
included in the income statement.
Revenue Expenditure:
Revenue expenditure is incurred in either:
• Running the business on a day-to-day basis;
• Maintaining the existing capacity of non-current assets.
Example: Repainting the old building after three years.
Repair to van
* Revenue expenditure is a part of the Statement of Comprehensive Income.
©Maple Le af I n ter n ation al S cho ol 2|Page
, MAPLE LEAF INTERNATIONAL SCHOOL
Revenue Receipt:
Revenue receipts are receipts from the normal trading activities of the business. They include selling
inventory to customers. They are included in revenue on the income statement.
Incorrect treatment of Capital Expenditure & Revenue Expenditure:
If capital expenditure is incorrectly treated as revenue expenditure or vice-versa, then both the income
statement and statement of financial position will be incorrect. Profit for the year in the income statement
will be inaccurate as expenses will be overcast/undercast and the statement of financial position will not
show the true & fair position of the business as the value of the non-current asset will be
overcast/undercast.
Example: A bookkeeper posts the purchase of a photocopier to the stationery account. The purchase of
the photocopier should have been posted to the office equipment account.
In this example, capital expenditure has been incorrectly posted to revenue expenditure, so:
• Profit for the year will be understated
• The statement of financial position values will not include the value of the asset.
Distinguishing between Capital Expenditure & Revenue Expenditure:
Transactions Capital Revenue
Buying a Delivery Van X
Buying petrol for Van X
Putting extra headlights for Van X
Painting outside of a brand-new building X
Repainting the same building three years X
later
For further details see – [IGCSE9-1 -Chapter 12; Frank Wood: Chapter 20]
©Maple Le af I n ter n ation al S cho ol 3|Page
, MAPLE LEAF INTERNATIONAL SCHOOL
Date: 28th October 2025
Study Notes
Chapter14: Financial Statements (without adjustments)
Study Note: 1 Subject: Accounting
Session: January 2025 (Girls) Subject Code: 4WAC1/01
Term: Final Examination 2025
For further details see – [Frank Wood; Ch. – 7,8 & 9]
©Maple Leaf In t er na tion al S cho ol
P a g e 1 |6
