Difference between Capital and Revenue expenditure

Capital expenditure is the money spent to gain long term benefits. The money is spent to buy the things which will produce current assets. A good example would be buying a machinery to produce more goods.

 

Money spent on a thing which will give benefit for more than 1 year is called capital expenditure

 

Revenue expenditure is the money spent to gain short term benefits. The money is spent on things which will be sold after being produced or processed. A good example would be buying raw material.

 

Money spent on a thing which will give benefit for less than 1 year is called revenue expenditure



One Responseto “Difference between Capital and Revenue expenditure”

1. habarurema jean pierre says:

   October 9, 2012 at 6:00 pm

   Difference between Capital and Revenue expenditure

   Capital expenditure is the money spent to gain long term benefits. The money is spent to buy the things which will produce current assets. A good example would be buying a machinery to produce more goods.

   Money spent on a thing which will give benefit for more than 1 year is called capital expenditure

   Revenue expenditure is the money spent to gain short term benefits. The money is spent on things which will be sold after being produced or processed. A good example would be buying raw material.

   Money spent on a thing which will give benefit for less than 1 year is called revenue expenditure
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