2. Capital Revenue Vs

3. Transactions Capital Revenue Capital Expenditure Capital Receipts Revenue Expenditure Revenue Receipts Wholly Current Charge Partly Current & Partly Deferred Wholly Deferred

4. Capital Expenditure E.L. Kohler: Capital Expenditure is an expenditure intended to benefit future period in contrast to a revenue expenditure which benefits a current period .

6. E.L. Kohler: Revenue Expenditure is an expenditure charged against operation ; a term used to contrast with capital expenditure Revenue Expenditure

8. Deferred Revenue Expenditure Statutory Others A Revenue Expenditure whose benefit extends beyond the year of incurrence E x p e n d i t u r e Year1 Year2 Year3

9. Receipts which do not have any effect on the result of the operation of the business Capital Receipts

10. Revenue Receipts All the recurring income earned during normal course of business

11. Capital Profits Profits earned through non / pre operational activities

12. Profits earned during the normal course of business as a result of business operation Revenue Profits

13. Capital Loss

14. Revenue Loss

15. Spent Rs. 20,000 for remodeling the factory and the value of factory enhanced by Rs. 15,000. Wages paid for the installation of Machine amounted to Rs. 2,000 and cost of carriage for the same also amounted to Rs. 500. An old machine costing Rs. 3,000(or W.D.V Rs. 1,800) was sold for Rs.1,000. The cost of removal of stock from old factory to the new on amounted to Rs. 1,000. The expenses incurred for white-washing the factory building amounted Rs. 4,000. Purchase of patent rights, Rs.4,000 and renewal fee for the next year Rs.400 Cost of repainting the factory building Rs.800. Compensation paid to a retrenched employee for loss of employment amounted to Rs. 2,000. Purchase if new tyre for Rs. 2,000 for an old car. Imported goods worth Rs.20,000 confiscated by customs authorities for non-disclosure of material facts. Examples

16. Fees paid to a lawyer for drawing an agreement of lease for an immovable property amounted to Rs.1,000. Expenses incurred on research work for a particular product which ultimately did not produce any fruitful result amounted to Rs.10,000. Cost of conversion of gas plant to oil fuel plant for the generation of electricity amounted to Rs. 20,000. Plant appearing in the book value Rs. 8,000 and stock valued at Rs. 4,000 were destroyed by fire, amount recovered from the Insurance Company Rs. 10,000 and Rs. 5,000, respectively Incurred Rs. 4,000 in redecorating a cinema hall and Rs.12,000 in enhancing the sitting accommodation. Fire insurance premium of Rs. 1,200 is paid on 30th November for one year. The accounting date is 31st December. Examples

17. A firm of builders spends Rs. 1,60,000 in purchasing a plot of land and erects officers for its own use a quarter of the site. The remaining land is used for building houses which are sold to the Public . A sum of Rs. 2,000 spent on a machine comprises Rs. 400 for replacement of worn out parts and Rs. 1,600 for additions to new devices which enable the output to be doubled. Visit of sales manager to U.K. total cost of which was 20,000 for promoting export sales visit is quite successful. Examples

18. À‘Å ˆÅ œÌ«Å ÜÌó: Knowledge Benefits Ultimate Surrender

19. Thank You Palanichamy V P Bharadwaj Institute, No 56 North Mada St, Nungambakkam Chennai 34 Ph: 98415-37255 www.bharadwajinstitute.com