|
Capital Expenditures |
Revenue Expenditures |
|
1 |
Its effect is long term i.e., it is not
exhausted within the current account year. Its benefit is enjoyed in
future year or years also. In a word, its effect is reduces gradually. |
1 |
Its effect is temporary, i.e., it is
exhausted within the current accounting year. |
|
2 |
An asset is acquired or the value of an
asset is increased as a result result of this expenditure. |
2 |
Neither an asset is acquired nor the value
of an asset is increased. |
|
3 |
It does not occur again and again - it is
non-recurring and irregular. |
3 |
It occurs repeatedly - It is recurring and
regular. |
|
4 |
Generally, it has physical existence i.e.,
it can be seen with eyes. |
4 |
It has no physical existence, i.e., it
cannot be seen with eyes. |
|
5 |
This expenditure improves the position of
the concern |
5 |
This expenditure helps to maintain the
concern |
|
6 |
A portion of this expenditure is shown in
the trading and profit and loss account or income and expenditure
account as depreciation. |
6 |
The whole amount of this expenditure is
shown in trading and profit and loss account or income and expense
account. But deferred revenue expenditures and prepaid expenses are not
shown. |
|
7 |
It appears in balance sheet until its
benefit is fully exhausted. |
7 |
It does not appear in balance sheet.
Deferred revenue expenditure, outstanding expenditure, outstanding
expenses and prepaid expenses, however, temporarily shown in the balance
sheet. |
|
8 |
It does not reduce the revenue of the
concern. Purchase of fixed assets does not effect revenue. |
8 |
It reduces revenue. Payment of salaries to
employees decreases revenue. |
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