Ch5: Accruals, Prepayments, Capital and Revenue Receipts

Question 1

What is capital expenditure?

Answer 1

Funds used by a company to acquire or upgrade physical assets such as property, buildings or equipment

e.g. repairing a roof, new factory

Question 2

What is Revenue expenditure?

Answer 2

Costs in the day to day running of the business
e.g. Light and heat, wages

Question 3

What are capital receipts?

Answer 3

Receipts derived from activities which are not part of the normal trading activities of the business
e.g. capital (owner), bank loans

Question 4

What are revenue receipts?

Answer 4

Receipts that relate to the normal activities of a business
e.g. sale of goods, rent received