Capital losses refer to losses from the sale of fixed assets and are generally non-recurring. They do not arise from normal business activities and can only be set off against capital gains. Revenue losses arise from normal business operations and recurring expenses exceeding income. Revenue losses indicate business inefficiency while capital losses do not. Capital expenditures provide benefits over many years while revenue expenditures only provide short-term benefits within a year. Capital receipts are non-recurring from sources like owner's capital or asset sales, while revenue receipts are recurring from regular business operations.

1. Capital and Revenue concept
Capital and revenue loss
Capital loss refers to any loss on account of fixed assests. It is a decrease in the
value of an investment . Loss on capital can be set off against the income from
capital gain only. And capital loss is not incidental to business. Capital loss are
generally non recurring in nature.They are not realised through the normal
activities of business. For example: If an investment costing Rs. 2000 is sold for
Rs.1700, there will be capital loss of Rs.300.
 Shares and debentures issued at discount premium or redemption of
debentures
 loss on sale of fixed assets are also capital loss.
Revenue loss
The loss on account of circulating capital assets is a revenue loss. Revenue loss is
incidental to business. In other words, the losses which arises during the normal
(day to day) activities is known as revenue loss. It is excess of revenue expenses
over revenue income. Revuenue loss are generally recurring in nature.
Fore example: loss on sale os stock in trade.
Difference between Capital loss and Revnue loss:
Basis Capital loss Revenue loss
Causes Capital loss occurs due to the sale
of assets, share and debentures at
a price less than their face value
or book value.
Revenue loss occurs due to heavy
amount of operating expenses and
low turnover or sales.
Nature Capital loss does not occur in the
normal course of the business.
Revenue loss occur in the
normal course of the business.
Indication Capital loss does not indicate the
inefficiency of the business.
Revenue loss indicate the
inefficiency of the business.
Treatmnet Capital loss is shown on the asset
side of the balance sheet.
Revenue loss is shown on the
debit side of the trading and profit
and loss accounts and asset side
of the balance sheet as
accumulated loss.

2. Capital and Revenue expenditure
When the benefit of expenditure is available over a number of years , it is a capital
expenditure. Capital expenditure has physical existence except intangible assets.
 Expenditure in the acquisition of fixed assets
 Other expenses inccured in connection with their acquisition
 Any expenses which results as expansion and increase in life substantially of
fixed asset
 Expenses on development of mine and land plantation till they become
operation
 Cost of experiment which ultimately result in acquisition of a patent
 Legal charges incurred in connection with acquiring or defending suits for
protecting fixed assets , rights , etc
Revuenue expemditure
When the benefit of expenditure is likely to affect for less than a period of one
year, it is considered as revenue expenditure. So all expenses incurred during the
regular course of business are treated revenue expenditure.
 Depreciation on fixed assets
 Expenses incured in the day to day conduct of business
 Expenses incured im buying goods for resale on raw materials for
manufacturing
 Interest on loans borrowed for running the business
Deferred revenue expenditure
The benefits of certain expenditure are available for more than a year. It should be
spread over number of accounting years,
 Expenses incurred on adverstising campaigns to introduce new product in
the market
 Expenses incurred in the fornation of a new company
 Brokerage charge, underwriting comission and other expenses incurred in
connection with the issue of shares and debentures.

3. Difference between Capital expenditure and Revenue expenditure
Basis Capital expenditure Revenue expenditure
Meaning Expenses incurred in
acquiring of a capital asset or
improving the capacity of an
existence one.
Expenses incurred in regulating th
day to day activities of bueinss
Term It has long term effect It has short term effect
Captalisation Yes No
Show in It is shown in the income
statement and balance sheet
It is shown in income statement
Outlay It is non recurring in nature It is recurring in nature
Benefit Benefit more than a year Only in the current accounting year
Earning
capacity
It seeks to improve earning
capacity
It maintains earning capacity
Matching
concept
It is not matched with capital
receipts
It is matched with revenue receipts
Capital and Revenue receipts
Capital receipts
Capital receipts are the amounts receibed from the owner as capital, loan from
outsiders and proceeds from the sale of fixed assets, they are non recurring in
nature. In other words, capital receipts are the receipts which do not results from
the regular course of business.
 Capital reecived from owner
 Loan from outsiders
 Sale of fixed assets
Revenue receipts
Revenue receipts are the receipts which results from the regular course of business
activities. The revenue receivd from the sale of product and services are revenue
receipts. Revenue receipts are shown in income statemnt as income.

4. Difference between Capital receipts and Revenue receipts
Basis Capital receipts Revenue receipts
Meaning Capital receipts are the income
generated from the incvesting
or financing activities of a
firm
Revenue receipts are the
income generated from the
operating activites of a
business firm
Nature It is non recurring in nature It is recurring in nature
Term It has long term effect It has short term effect
Show in It is shown in Balance sheet It is shown in Income
ststement
Received in
exchange of
Source of income Income
Value of
asses or
liability
It either decrases the value of
assets or increases the vlue of
liability
It increase or decrease the
value of assets or liability