Capital and Revenue

Question 1

Capital expenditure

Answer 1

expenditure incurred purchasing fixed assets or expenditure incurred with the improvement of fixed assets.

Several accounting periodss

Can generate income

Fixed asset as well

Question 2

Examples of capital expenditure

Answer 2

Delivery cost of an asset

Legal cost associated with the purchase of premises and land

Installation cost of an asset

Architect fees and costs of supervision of construction

Even the costs associated with demolition to clear any obsolete buildings can be ‘capitalised’

Question 3

Revenue Expenditure

Answer 3

Running expenses and maintenance expenses

within 12 months

does not add value to fixed assets

Question 4

examples of revenue expenditure

Answer 4

maintenance and running costs

Repairs to fixed assets

Salaries and wages

Rents and rates