Capital and Revenue Expenditure

Question 1

What is the definition of capital expenditure

Answer 1

Items that will benefit the firm beyond the financial year and creates an asset

Question 2

What are three types of capital expenditure

Answer 2

Purchase of a fixed asset
Costs spent to install the fixed asset to get it ready for use
Improvements to fixed asset to improve its lifetime

Question 3

What is the definition of revenue expenditure

Answer 3

items that will benefit the firm for the current year and are classified as expenses. They are recurring costs incurred to earn revenue and will affect the current year’s profit loss for the year calculations. These are recorded in the income statement