Types of Expenditure Flashcards
Expenditure is money spent by a business and can be split into two categories:
1.
2.
- Capital expenditure.
- Revenue expenditure.
Capital items are the what?
E.g. Machinery and vehicles.
Assets bought from capital expenditure.
A statement of a financial situation is what?
E.g. Balance sheet.
A financial document showing the net worth of a business.
Capital expenditure includes:
1.
2.
3.
4.
5.
- Non-current assets.
- Intangibles.
- Patents.
- Trademarks.
- Brand name.
Non-current assets are items owned by a business for a _____________________.
E.g. land or vehicles.
long period of time
Most non-current (fixed) assets lose value over time and for this reason they are depreciated.
This means that each year their value on a balance sheet is_____________ in order to give a fair value of the asset.
reduced
Intangible assets are items that add value to a business, but __________________.
cannot be touched
What are the 4 types of intangible assets?
1.
2.
3.
4.
- Goodwill.
- Patents
- Trademarks.
- Brand-name.
Goodwill is when a business has a well known reputation.
What does that mean?
An established customer base and an increased selling price.
A patent is the ________________________.
A patent allows a business to launch a product at a premium selling price.
legal protection of an invention
A trademark is a feature sets apart one business’s goods or services from those of its competitors.
Trademarks can be a key influence on _______________ and build a _____________________.
consumer choice
strong brand loyalty
True or false: A brand name is a feature of a business that is not recognised by customers or distinguishes the business from competitors.
False.
Revenue expenditure is incurred by a business so it will show on the _____________________ (also known as a statement of comprehensive income).
profit and loss account
