CA Foundation Exam > CA Foundation Videos > Principles and Practice of Accounting > Difference between Capital & Revenue Expenditure
Difference between Capital & Revenue Expenditure Video Lecture | Principles and Practice of Accounting - CA Foundation
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FAQs on Difference between Capital & Revenue Expenditure Video Lecture - Principles and Practice of Accounting - CA Foundation
| 1. What is the difference between capital and revenue expenditure? |  |
Ans. Capital expenditure refers to the expenses incurred by a business to acquire assets that will provide long-term benefits and increase the value of the business. On the other hand, revenue expenditure refers to the expenses incurred by a business for day-to-day operations and maintenance, which do not result in the acquisition of assets.
| 2. Can you provide some examples of capital expenditure? | |
Ans. Some examples of capital expenditure include the purchase of land, buildings, machinery, vehicles, and equipment. These are investments made by a business that have a long-term impact on its operations and generate future benefits.
| 3. What are some examples of revenue expenditure? | |
Ans. Examples of revenue expenditure include expenses related to salaries, rent, utilities, repairs, and maintenance. These expenses are recurring in nature and are necessary for the day-to-day functioning of the business.
| 4. How are capital and revenue expenditures treated in accounting? | |
Ans. Capital expenditures are recorded as assets on the balance sheet and are depreciated or amortized over their useful life. Revenue expenditures, on the other hand, are recorded as expenses on the income statement and are deducted from revenue to determine the net income of the business.
| 5. Why is it important to differentiate between capital and revenue expenditure? | |
Ans. Differentiating between capital and revenue expenditure is important for accurate financial reporting and decision-making. It helps in determining the true profitability of a business, assessing the value of its assets, and planning for future investments. It also ensures compliance with accounting standards and taxation regulations.
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Nov 21, 2024 Last updated |
Video Description: Difference between Capital & Revenue Expenditure for CA Foundation 2024 is part of Principles and Practice of Accounting preparation.
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