Revenue Expenditure

Money spent to reduce working expenses is considered as revenue expenditure.

Definition

Revenue expenditure is the money spent by a company on its day-to-day operations and maintenance of the business. This type of expenditure is considered as an expense which is incurred in the current year and does not result in the acquisition of a fixed asset or increase in the earning capacity of the business.

Examples of Revenue Expenditure

Some examples of revenue expenditure include:

- Rent
- Wages and salaries
- Utilities
- Office supplies
- Repairs and maintenance
- Advertising and marketing

Explanation

Money spent to reduce working expenses is considered as revenue expenditure because it is an expense that is incurred in the current year and does not result in the acquisition of a fixed asset or increase in the earning capacity of the business. This type of expenditure is deducted from the revenue earned by the company to calculate the net income or profit.

For example, if a company spends money to reduce its utility bills, this would be considered as a revenue expenditure because it is an expense that is incurred in the current year and does not result in the acquisition of a fixed asset or increase in the earning capacity of the business.

Conclusion

In conclusion, money spent to reduce working expenses is considered as revenue expenditure because it is an expense that is incurred in the current year and does not result in the acquisition of a fixed asset or increase in the earning capacity of the business. This type of expenditure is deducted from the revenue earned by the company to calculate the net income or profit.

Money that is spent on reducing working expenses is an capital expenditure because the working expenses are incurred on assets like building,machinery,plant,etc...so its in improvement of an asset so it is concluded that it is CAPITAL EXPENDITURE!!