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Commerce Exam  >  Commerce Questions  >  Revenue Expenditure meansa)The expenditure wh... Start Learning for Free
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Revenue Expenditure means
  • a)
    The expenditure which is incurred for the day to day running of the business 
  • b)
    The amount which is incurred in acquiring or improving the value of fixed assets
  • c)
    Both
  • d)
    None
Correct answer is option 'A'. Can you explain this answer?
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Revenue Expenditure meansa)The expenditure which is incurred for theda...
A revenue expenditure is a cost that will be an expense in the accounting period when the expenditure takes place. Revenue expenditures are often discussed in the context of fixed assets. The revenue expenditures take place after a fixed asset had been put into service and simply keeps the asset in working order.
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Revenue Expenditure meansa)The expenditure which is incurred for theda...
Revenue Expenditure: Meaning and Explanation

Meaning:
Revenue Expenditure refers to the expenditure that a business incurs for its daily operations or for the purpose of generating income. It is a recurring expense that a business needs to incur to maintain its operations. Such expenditure does not result in the acquisition of fixed assets or any permanent improvement in the value of existing assets.

Explanation:
Revenue Expenditure is an essential part of every business as it is required for the day-to-day functioning of the business. It is different from Capital Expenditure, which is incurred for acquiring or improving the value of fixed assets. Revenue expenditure is a recurring expense that is incurred regularly, whereas capital expenditure is incurred only once or occasionally.

Examples of Revenue Expenditure:
Some examples of Revenue Expenditure are as follows:

- Rent
- Salaries and wages
- Utilities, such as electricity, water, and gas
- Advertising and marketing expenses
- Office supplies and stationery
- Maintenance expenses
- Insurance premiums
- Taxes
- Raw material costs
- Interest expenses on loans

Conclusion:
In conclusion, Revenue Expenditure is an essential part of every business as it is required for the day-to-day functioning of the business. It is different from Capital Expenditure, which is incurred for acquiring or improving the value of fixed assets. Revenue expenditure is a recurring expense that is incurred regularly, whereas capital expenditure is incurred only once or occasionally.
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Direction: Read the following passage and answer the question that follows:Jordan Cement Factories Company was set up in December 1951 as a share holding company. In March 1954, the company commenced business with the first bag of cement.In order to ascertain the cost of products for a particular period of time, the company prepares cost sheet, the cost sheet data are collected from various statements of accounts which have been written in cost accounts either on day to day or regular records. The main elements of cost sheet are prime cost,work cost and cost of production.The main principle that underlines the cost classifications of main elements of the cost is fixed and variable cost basis. The company does not consider any others basis like direct and indirect costs or revenue and capital cost or functional classification for cost classification. Fixed and variable cost is based on the changes in activity or volume. Fixed cost or period cost remain unchanged in spite of changes in volume or activity.Variable cost or product cost vary in complete proportion to the volume of output. Capital and revenue basis depends on the purpose of expenditure. Any cost incurred in purchasing assets either to earn income or increasing the earning capacity of the business is known as capital cost. But any cost incurred for the purpose of maintaining the earning capacity of the business it is revenue expenditure.Q. Read the following statements - Assertion (

Direction: Read the following passage and answer the question that follows:Jordan Cement Factories Company was set up in December 1951 as a share holding company. In March 1954, the company commenced business with the first bag of cement.In order to ascertain the cost of products for a particular period of time, the company prepares cost sheet, the cost sheet data are collected from various statements of accounts which have been written in cost accounts either on day to day or regular records. The main elements of cost sheet are prime cost,work cost and cost of production.The main principle that underlines the cost classifications of main elements of the cost is fixed and variable cost basis. The company does not consider any others basis like direct and indirect costs or revenue and capital cost or functional classification for cost classification. Fixed and variable cost is based on the changes in activity or volume. Fixed cost or period cost remain unchanged in spite of changes in volume or activity.Variable cost or product cost vary in complete proportion to the volume of output. Capital and revenue basis depends on the purpose of expenditure. Any cost incurred in purchasing assets either to earn income or increasing the earning capacity of the business is known as capital cost. But any cost incurred for the purpose of maintaining the earning capacity of the business it is revenue expenditure.Q. The main principle underlying the cost classification is the main element of the cost in ..................... and ..................... cost basis.

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Revenue Expenditure meansa)The expenditure which is incurred for theday to day running of the businessb)The amount which is incurred inacquiring or improvingthe value offixed assetsc)Bothd)NoneCorrect answer is option 'A'. Can you explain this answer?
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