This document distinguishes between capital and revenue expenditures. Capital expenditures are expenses to acquire long-term assets that provide benefits for more than one year, such as new equipment. They are recorded on the balance sheet and cash flow statement. Revenue expenditures are everyday operating costs like wages and utilities that provide benefits within one year. They are recorded on the income statement but not the balance sheet. Examples provided are purchasing a new machine as capital expenditure and hiring employees to operate it as revenue expenditure.