The document defines capital and revenue transactions, expenditures, and receipts. Capital transactions and expenditures have long-term effects and benefits the business permanently, such as purchasing buildings or machinery. Revenue transactions and expenditures have short-term effects, such as paying salaries. Capital expenditures are recorded as assets, while revenue expenditures are recorded as expenses that affect profit. Capital receipts come from selling fixed assets, while revenue receipts come from regular business operations.

1. CAPITAL & REVENUE
DEFINE CAPITAL TRANSACTIONS.
Transactions having long-term effect are known as capital transactions.
DEFINE REVENUE TRANSACTIONS.
Transactions having short-term effect are known as revenue transactions.
WHAT DO YOU MEANT BY CAPITAL EXPENDITURE?
Any expenditure that benefitted the business for long period of time and permanently used in the business
for the purpose of earning revenue is called capital expenditure e.g.
 Purchased building
 Purchased furniture
WHAT DO YOU MEANT BY REVENUE EXPENDITURES?
Any expenditure that benefitted the business for short period of time is called revenue expenditure e.g.
 Salaries paid
 Rent paid
WHAT IS CAAPTALIZED EXENDITURE?
Expenditure connected with the purchase of fixed asset are called capitalized expenditure e.g. wages paid
for the installation of machinery.
WHAT ARE THE TREATMENTS OF CAPITAL AND REVENUE EXPENDITURES?
Capital expenditures are shown in the balance sheet assets side while revenue expenditures are shown in
the trading and profit and loss account debit side.
DEFINE CAPITAL PAYMENT.
The amount which is actually paid on account of capital expenditures
DEFINE REVENUE PAYMENT.
The amount which is actually paid on account of revenue expenditures
DEFINE DEFERRED REVENUE EXPENDITURES.
Actually it is revenue expenditure but it contains some properties of capital expenditure e.g.
 Preliminary expenses
 Research and development cost
 Heavy advertisement and repair
DEFINE REVENUE RECEIPTS.
Amount received against revenue income are called revenue receipt
DEFINE CAPITAL RECEIPTS.
Amount received against capital income are called capital receipts.
DEFINE CAPITAL PROFITS.
Capital profit which is earned on the sale of the fixed assets.
DEFINE REVENUE PROFIT.
The profit which is earned during the ordinary course of business is called revenue profit.
PUNJAB COLLEGE OF COMMERCE PROF. HAFIZ MUHAMMAD NAWAZ PAGE 1

2. CAPITAL & REVENUE
DEFINE CAPITAL LOSS.
The loss suffered by a company on the sale of fixed assets.
DEFINE REVENUE LOSS.
The loss suffered by the business in the ordinary course of business is called revenue loss.
PUNJAB COLLEGE OF COMMERCE PROF. HAFIZ MUHAMMAD NAWAZ PAGE 2