Capital And Revenue Expenditure

Question 1

What is capital expenditure?

Answer 1

Spending on the purchase, alteration ir improvement of non-current assets is called capital expenditure. The cost is added to the value of the asset.

Question 2

What is revenue expenditure?

Answer 2

Money spent on the running expenses of a business. These resources are typically used in less than a year and is recorded under expenses

Question 3

Capital expenditure examples for a delivery van

Answer 3

. Purchase and delivery cost
. Modifications to the van
. Painting of the company logo

Question 4

Examples for capital expenditure on machinery

Answer 4

. Purchase and delivery cost
. Installation and testing
. Initial staff training

Question 5

Examples of revenue expenditure for a delivery van

Answer 5

. Road tax
. Insurance
. Fuel
. Servicing, repairs and MOT
. Driver’s wages

Question 6

Examples of revenue expenditure for machinery

Answer 6

. Fuel/ power costs
. Insurance
. Maintenence and servicing
. Repairs and replacement of worn out parts
. Operating costs including wages