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CBSE Class 12-commerce Answered

Deference between capital expenditure and revenue expenditure 
Asked by Pinkubasak9647 | 06 Aug, 2019, 08:38: AM
answered-by-expert 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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