Difference between capital and revenue?

Question

I need to kno the difference between capital expenditure and revenue expenditure and the difference between capital receipt and revenue receipt, thanks

Answer 1

Revenue expenditure is money you spend on things that you only use that financial year. ie wages, rent etc
Capital expenditure is money you spend on things that you will use for several years - vehicles, computers etc. You then write the capital expenditure in the accounts as depreciation over a number of years depending on what the thing is and put the balance as an asset

Answer 2

Revenue Expenditure

Answer 3

The costs for a revenue project are treated as direct cost on your company. So that diminishes your profits as shown on your profit & loss account. In a capital project the costs are treated instead as an investment. This doesn't show on your profit and loss, but rather shows on your balance sheet as an application of funds. So where you had say an asset in the form of £1m cash, now you have an asset in the form of £1m (for example) new production plant. You may imagine that both these come to the same thing in that money is spent, and indeed the Cash Flow statement will reflect this. But it's important for the company and investors to differentiate between a pure cost (P&L) and an investment (Balance Sheet).

Answer 4

Adam Smith devised the principle that fixed capital as what the owner turns to profit by keeping it in his own possession, circulating capital as what he makes profit of by parting with it and letting it change masters. This principle is well established in UK GAAP and UK tax law.

Answer 5

revenue expenditure is any expense is essential to do revenue such as cost of goods sold , salaries , depreciation of assets , rent , but capital expenditure is any directly expense of bringing the asset to working condition for its intended use . such as :the cOSt os site preparation , installation costs