Write the difference between capital expenditure and revenue expenditure?
The major differences between capital expenditure and revenue expenditure are as follows −
|Capital expenditure||Revenue expenditure|
Expenditure incurred in enhancing the current one or buying the new one.
It’s a long term expenditure.
Lump sum amount is required.
Amount is capitalized.
Reflects in balance sheet.
It’s a non- recurring in nature.
Improves earning capacity.
Expenditure is not matched with capital receipts.
Benefit period is more than a year.
Have physical presence except for intangibles.
Expenditure incurred to run day to day operations.
It’s a short term expenditure.
Amount is small when compared to capital expenditure.
Reflects in profit and loss account (income statement).
It’s a recurring in nature.
It will maintain the earning capacity.
Expenditure is matched with revenue receipts.
Benefit period is up to current year.
Don’t have a physical presence.
Published on 24-Jul-2020 10:40:29