Revenue Expenditure

Explanation:

When a company purchases computers for re-sale, it is considered as revenue expenditure. Revenue expenditure refers to the expenses incurred in the normal course of business operations to generate revenue. It is incurred to maintain or improve the earning capacity of the business.

Key Points:

1. Revenue Expenditure: Revenue expenditure is the day-to-day expenses incurred by a business to generate revenue and maintain its operations. It is usually recurring in nature and does not result in the acquisition of any long-term assets.

2. Purpose of Revenue Expenditure: The main purpose of revenue expenditure is to maintain the existing level of business operations and generate revenue. It includes expenses such as rent, salaries, advertising, utilities, and inventory purchases for re-sale.

3. Computers for Re-sale: When a company purchases computers for the purpose of re-selling them, it falls under the category of revenue expenditure. The computers are acquired with the intention of generating revenue through their sale to customers.

4. Non-Capital Expenditure: Capital expenditure, on the other hand, refers to the expenses incurred to acquire long-term assets such as land, buildings, machinery, or vehicles. These assets are not intended for immediate resale but are used in the business for an extended period.

5. Impact on Financial Statements: Revenue expenditure is treated as an expense in the income statement and reduces the company's net income. It is deducted from the revenue generated to calculate the net profit. On the other hand, capital expenditure is recorded as an asset on the balance sheet and is depreciated over its useful life.

6. Decision-Making: Differentiating between revenue and capital expenditure is crucial for financial decision-making. Revenue expenditure is deducted fully in the year it is incurred, while capital expenditure is spread over multiple years through depreciation.

In conclusion, when a company purchases computers for re-sale, it is considered as revenue expenditure. This distinction is important for financial reporting, as revenue expenditure is treated as an expense and deducted in the year it is incurred.