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Capital & Revenue Expenditure

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Capital & Revenue Expenditure

I always got confuse between Capital & Revenue expenditure. Can anybody make it clear to me???

March 5th 2015 AN ACCA USER 340 Points

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+1 Vote

Capital Expenditure (CAPEX) is the cost to acquire the Non-current Assets and to improve the life and validity of it. Example is like you by the car from supplier it may contains its legal fees, delivery charges, transit insurance or what so ever and like you use air tight containers or refrigerator to store your meal increase the life of food.
On the other hand Revenue Expenditure (REVEX) is the day to day operating cost incurred to run the Business, like utility, inventory etc. and to maintain and consumption cost of assets like fuel to run the car/ machines, oil change to maintain it.

March 6th 2015 AN ACCA USER 1,640 Points
0 Votes

Just bear it in mind that capital expenditure deals with the purchase and improvement of the productive capability of capital items like non-current assets, while revenue expenditure is either the maintenance of capital items or the purchase of non-capital items that'll most likely leave the inventories during an accounting period.

May 15th 2015 AN ACCA USER 220 Points 1 Flag
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