Capital and Revenue Items:

Learning Objectives:

1. Define explain and give examples capital and revenue expenditures, receipts, payments, profits and losses.

2. What is the difference between capital and revenue expenditures?

3. What are the exceptions to the general rule of capital and revenue expenditures?

Difference between capital and revenue expenditures affects the fundamental principle of correct accounting. Proper adjustments are necessary before preparation of the final accounts. All items of capital and expenditure will find place in the balance sheet whereas all items of revenue expenditure will be included in the profit and loss account. If any incorrect adjustment or allocation is made between these expenditures, this will falsify  the final results as disclosed by the revenue account or the balance sheet.

Capital Expenditures:

Expenditure means the amount spent. All capital expenditures represent either an asset or liability and are shown in the balance sheet. Click here to read full articles

Revenue Expenditures:

All revenue expenditures have to be deducted from the income earned by the firm. That is to say, all revenue items will be taken to the profit and loss account. Click here to read full article

Difference Between Capital and Revenue Expenditures

Capital and Revenue Receipts, Payments, Profits and Losses:

Receipts refer to the actual amounts of cash received. They can be either of capital nature or revenue nature. Click here to read full article

Exceptions to the General Rules and More About Capital and revenue Expenditures:

Capitalized or deferred revenue expenditures, exceptions to the general rule, preliminary expenses and more about capital and revenue expenditures Click here to read full article.

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