Whats The Difference Between Revenue Expenditure And Capital Expenditure?
Capital expenditures are those expenditures that are incurred to improve the revenue earning capacity of fixed assets. Fixed assets are those assets that cannot be replaced unless the company goes into liquidation. For example Plant & Machinery, Building, Furniture etc. Hence whenever an expense is incurred the benefit of which can be enjoyed not only in the present year but future years as well, we term it as a capital expenditure. Revenue expenditure on the other hand are all those expenditures the benefit of which can be derived in the present year only. It is an expense incurred with respect to the present year.
