Types Of Expenditure Flashcards
What is Capital expenditure ?
Capital expenditure - these are assets - capital items - that the business plans to use over a long period of time . There are 2 types of assets non current (tangible ) and intangible .
What is revenue expenditure ?
Revenue expenditure - is the day to day costs incurred in running a business
Capital expenditure - what is meant by non current assets (tangible ) ?
Non current assets are items owned by the business that will remain in the business for a reasonable period of time
Capital expenditure - examples of non current assets ?
Non current assets ;
-Land ,
-Building and premises ,
-Machinery and equipment ,
-Vehicles ,
-Fixtures and fittings .
Capital expenditure - what is meant by intangible assets ?
Intangible assets are not physical items ( cannot be touched ) and may be difficult to value and sell
Capital expenditure - what are the 4 types of intangible assets ?
-Goodwill ,
-Patents,
-Trademarks ,
-Brand names.
Capital expenditure -Intangible asset - Goodwill ?
Goodwill - value of the business , it is a measure of the number of customers and its reputation
Capital expenditure - intangible assets - Patents ?
Patents are the legal protection of an invention
Capital expenditure - intangible assets - Trademarks ?
Trademarks are a logo , symbol , brand name , word or colour
Capital expenditure - intangible assets - brand name ?
Brand names is a feature of the business which is recognisable to its customers and distinguishes the business from its competitors
What is straight line depreciation ?
Straight line depreciation reduces the value of an asset by the same amount each year over its life
What is reducing balance depreciation ?
Reducing balance depreciation shows the loss of value as being higher during the early years
Examples of revenue expenditure ?
-Heating and lighting - payments for services such as gas and electricity
-Water - payment for supply of water to premises
-insurance - Businesses are legally required to take out buildings , contents , public liability and employers liability insurance
-Telephone - administrative costs
-Postage - administrative costs
-Stationary and printing - administrative costs
-Salaries - annual sum of money divided into equal monthly payments paid to employees
-Wages - hourly rate paid to employees
-Bank charges -Bank accounts fees payable on every transaction
-Interest paid - on loans and mortgages
-Discounts allowed - customers receive money off goods as an incentive to purchase or buy in bulk
-Inventory - raw materials , supplies required to run a business
-Rent - if business doesn’t own premises
What are the 4 types of insurances that a business is legally required to take out ?
-Buildings ,
-contents ,
-Public liability ,
-Employers liability insurances .
