Capital and Revenue Items:
Define explain and give examples capital and revenue expenditures, receipts, payments, profits and losses.
What is the difference between capital and revenue expenditures?
What are the exceptions to the general rule of capital and revenue expenditures?
Difference between capital and revenue expenditures affects the fundamental principle of correct accounting. Proper adjustments are necessary before preparation of the final accounts. All items of capital and expenditure will find place in the balance sheet whereas all items of revenue expenditure will be included in the profit and loss account. If any incorrect adjustment or allocation is made between these expenditures, this will falsify the final results as disclosed by the revenue account or the balance sheet.
Expenditure means the amount spent. All capital expenditures represent either an asset or liability and are shown in the balance sheet. Click here to read full articles.
All revenue expenditures have to be deducted from the income earned by the firm. That is to say, all revenue items will be taken to the profit and loss account. Click here to read full article.
Receipts refer to the actual amounts of cash received. They can be either of capital nature or revenue nature. Click here to read full article.
Capitalized or deferred revenue expenditures, exceptions to the general rule, preliminary expenses and more about capital and revenue expenditures Click here to read full article.
Other Related Accounting Articles:
- Difference Between Capital and Revenue Expenditures
- Capital and Revenue Receipts, Payments, Profits and Losses
- More About Capital and Revenue Expenditures
- Revenue Expenditures
- Capital Expenditures
- Capital Budgeting Decisions:
- Cash Budget Definition
- Income Tax and Capital Budgeting Decisions
- Cash Budget | Cash Budgeting
- Capital Gearing Ratio
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