Differences Between Capital Expenditures And Revenue Expenditures

The following are the main differences between capital and revenue expenditures

Nature

Capital expenditure is of non-recurring nature. Revenue expenditure is of recurring nature.

Purpose

Capital expenditure is incurred in acquiring permanent assets or improving their existing capacity. Revenue expenditure is incurred in managing day-to-day activities of the organization and maintaining its fixed assets.

Benefit

Capital expenditure gives benefit over a number of years. Revenue expenditure gives benefit not for more than one year.

Earning

Capital expenditure helps in increasing earning capacity of the business. Revenue expenditure helps in earning capacity of the business.

Treatment

Capital expenditure is shown on asset side of the balance sheet. Revenue expenditure is shown on the debit side of the trading and profit and loss account.