Distinction between Capital Expenditure and Revenue Expenditure
The following are the points of distinction between a Capital Expenditure and a Reyenue Expenditure;
(a) Capital expenditure is incurred for acquisition of fixed assets for the business. While revenue expenditure is incurred for day-to-day operation of the business.
(b) Capital expenditure is incurred for increasing the earning capacity of the business x liie :evënue expenditure is incurred for maintaining the earning capacity of the business.
(c) Capital expenditure is of non-recurring nature while revenue expenditure is of a recurring nature.
( The benefit of capital expenditure is received over a number of years and only a small part of it, as depreciation, is charged to the.profit and loss account each year. The rest appears in the balance sheet as an asset. While the benefit of revenue expenditure expires in the year in which the expenditure is incurred and it is entirely charged to the profit and loss account of the relevant year.