CBSE Class 12-commerce Answered
Deference between capital expenditure and revenue expenditure
Asked by Pinkubasak9647 | 06 Aug, 2019, 08:38: AM
Expert Answer
Following are the points of differences between Capital and Revenue Expenditure:
Sr. no. |
Basis |
Capital Expenditure |
Revenue Expenditure |
1 |
Meaning |
It is that expenditure which results in acquiring or bringing into existence an asset or advantage of enduring benefit. |
It is that expenditure the benefit of which is exhausted within the accounting year in which it is incurred. |
2 |
Purpose |
It is incurred to acquire fixed assets for use in business which will increase the earning capacity of the business. |
It is incurred to run the business and earn more profits. |
3 |
Type of Account |
It is an Asset Account. |
It is an Expense Account. |
4 |
Disclosure |
It is shown in the Balance Sheet. |
It is shown in the Trading or Profit and Loss Account. |
Answered by Surabhi Gawade | 06 Aug, 2019, 11:25: AM
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