Capital Expenditure: – Capital expenditure is that expenditure which incurs to increases the revenue earning capacity of a business.
Example: –
- Purchase of land, buildings, furniture and machinery etc.
Revenue Expenditure: – Revenue expenditure is that expenditure which incurs to generate revenue for a particular accounting period.
Example: –
- Salaries, Rent, wages, carriage of goods, repair, insurance etc.
Difference Between Capital And Revenue Expenditure :-
| Sr. No | Capital Expenditure | Revenue Expenditure |
|---|---|---|
| 1. | This expenditure is incurred to provide a benefit over a long period of time. | This expenditure is incurred to provide a benefit during the current period. |
| 2. | This increases the earning capacity of the business. | This maintains the earning capacity of business. |
| 3. | This is normally a non-recurring. | This is usually a recurring features. |
| 4. | It appears in the balance sheet and small part is charged as depreciation to income statement. | It doesn’t appear in balance sheet but charged against profit and appears in income statement. |
| 5. | Purchase of land, building, machine, car, furniture etc. | Salary, wages, repairs and maintenance, interest, insurance etc. |