Need For Dividing Income And Expenditure Into Revenue And Capital

Table of Contents

Capital expenditures are fixed assets like Plant, machinery, equipments etc. Revenue expenditures are short-term expenses which are used in the current period or within one year. Capital expenditures are a larger amount than the revenue expenditures.

So,it is necessary to distinguish between revenue and capital for presentation of true and fair position of the business.

 

Factors to be considered while distinguishing items into capital and revenue:

Nature of business:

Nature of business like Furniture is capital expenditure for any other business but it is a revenue expenditure of Hansa Palace ( a furniture seller)

-Object of Expenditure:

Expenditure which incurred on normal repairs of building on machine is revenue but if it is for increasing the earning capacity of the assets it will be capital expenditure.

-Effect Income generation:

Expenditure which to generate income in accounting year only is revenue expenditure an expenditure which generate income  more than one year is capital expenditure.

 

                              –   Nehal Sharma

Share with your friends

Share on facebook
Facebook
Share on twitter
Twitter
Share on whatsapp
WhatsApp
Share on pinterest
Pinterest
Share on linkedin
LinkedIn

This Post Has 5 Comments

  1. kamlesh salvi

    Nehal Ji
    I thank you
    Personally on your email address

  2. varsha kumawat

    nice

  3. Bhavya chittora

    Well explained

  4. Shraddha

    Nice

  5. Manish borana

    Helping note

Leave a Reply

Anil Computers

Anil Computers

Best computer Institute in Udaipur

Quiz_Anilcomputers1

सर्टिफिकेट  पाने के लिए अपने रिजल्ट का Screen shot नीचे दिये गये मोबाइल नम्बर पर send करें। साथ ही एक बार काॅल जरूर कर लेवें।


Notice: Undefined index: force_wall in /home/waapsols/public_html/anilcomputersudaipur/wp-content/plugins/ocean-extra/includes/widgets/facebook.php on line 155