Accounting for Revenue and Capital Expenditures

Subsequent expenditures made on property, plant, and equipment can be in the form of either capital or revenue expenditures. As we noted, the distinction between the two is often hazy and depends on the accounting policies developed by management. However, the distinction is important because it affects the determination of current and future periods’ income. …

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Capital and revenue expenditures multiple choice questions (MCQs)

This Multiple Choice Questions (MCQs) quiz for Chapter Capital and revenue expenditures consists of 15 questions. Each question has 4 answers from which you need to choose the correct one. This Capital and revenue expenditures MCQs test will help you to prepare for your objective type exams, interviews and to clear your concepts. If you …

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Rules for determining revenue expenditures

Revenue expenditures There is a difference between “Income” & “Revenue”. Income of any form is called Revenue, whereas, Revenue represents any income or expenditure. Revenue expenditures refer to the amount spent on routine expenses of the business e.g. salaries paid to employees, Rent of office paid etc. As revenue expenditure provides benefits for the current …

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Capital and revenue expenditures

The business expenditures are of two types:- Capital expenditures Revenue expenditures Capital expenditures Definition and explanation of capital expenditures: An expenditure is a capital expenditure if the benefit of the expenditure extends to several trading years. Capital expenditure may include the following expenditures:- Expenditure incurred on the acquisition of fixed assets, (tangible or intangible) which …

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Capitalized or deferred revenue expenditure

Definition Heavy expenditure of revenue nature, the benefit of which is available for a period of two or three or even more years is known as “capitalized or deferred revenue expenditure“. Explanation This expenditur√© is not written off from the profits of the year in which this expenditure is incurred but are spread over a …

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Difference between capital and revenue expenditures

It is not easy to decide whether a particular expenditure is of capital nature or that of revenue. Some expenses may lie on borderline and difficulty arises in deciding whether these are capital or revenue. This difficulty can easily be removed by answering the following questions:- Does the expenditure incurred in acquiring a fixed asset? …

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Items of revenue expenditures becoming capital expenditures

The following are the important examples of which are usually revenue, but under certain circumstances they become capital expenditure:- Legal charges Generally legal charges are revenue expenses, but legal charges paid in connection with the purchase of property or other fixed asset such as land, building, furniture, machinery and patents etc., are capital expenditure, as …

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Capital and revenue payments

Definition Expenditure is the full amount incurred by the business concern whether paid or not while the term payment refers to the amount actually paid. Payment is of two types:- Capital payment Revenue payment Capital payments The capital payments are the amount actually paid on account of some capital expenditures. Example: Some furniture is purchased …

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Capital and revenue receipts

Receipts are the amounts actually received. The receipts of business are of two kinds:- Capital receipts Revenue receipts Capital receipts Explanation: Capital receipts include the following: Receipts from the sale of fixed assets of a business. Payments into the business made either by Proprietor of business or by shareholders of a company to start a …

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