2. 1. CAPITAL EXPENDITURE
Capital expenditure is money spent on the purchase of
permanent or fixed assets for setting up the business in the
initial stage.
Improvement or extension of existing assets.
It is to increase the earning capacity of the business
enterprise.
Initial legal cost.
Long term assets.
It provides benefits up to more than one year.
Value added to the assets is depreciated year by year.
3. Capital expenditure.
Capital expenditure
Cost of financing a
Intangible assets Tangibleassets fixed assets
e.g : trade mark. e.g:land e.g: loan
4. 2.REVENUE EXPENDITURE
When some expenditure is incurred in any financial year
for the sake of generation of revenue in the current
financial year , this is called as revenue expenditure.
It is charged wholly to the p&l account of the concerned
financial year.
It ‘s a money spent on materials & services i.e consumed
by the business in carrying out business activities.
Expenses incurred for maintaining the efficiency of fixed
assets.
example : wages of workers,electricity bill etc.
5. REVENUE EXPENDITURE
REVENUE
EXPENDITURE
Upkeep of fixed Purchase of
Day to day assets
expenses stocks
6. COMPARISON
REVENUE EXPENDITURE CAPITAL EXPENDITURE
Smaller in size. Comparatively larger in size.
recurring in nature. non- recurring in nature.
Includes operating & non- Includes miscellaneous
operating expenses. expenditures.
Short term expenses. Expense is for long term.
Results in to short term income. Results in to long term income.
It’s effect gets exhausted usually Comparatively It’s effect last
in a year. longer.
7. some special expenditure seems to be revenue
expenditure but are treated as capital
expenditure:-
Initial expenses for the set up of company.
Raising loans ,underwriting commission &
legal expenses.
payment of Interest on capital(loan) before
production of company begins.
Expenses in acquisition & installation of
assets.
9. OPERATING ITEMS
An expenditure incurred by the company in carrying out
the operational activities of the company in which it is
involved mainly is known as operating expense.
e.g: money spend by parle agro in manufacturing
biscuits.
Operating income is revenue which is earned by
carrying out the main operational activities of the
company.
10. NON-OPERATING ITEMS.
Expenses & losses accounted by the company through
the processes, which are not the part of the operating
activities is known as non-operating expenses.
e.g. loss in investment by agro based company.
Non-operating income refers to the revenue that is not
generated through any of the operational activities of the
company.
e.g. rent received ,commission, benefits through long
term investments.
11. CASH FLOW FROM OPERATING
ACTIVITIES.
INFLOW OUTFLOW
Trade & other receivables. Purchase of inventories.
Revenue from services. Employee’s payment.
Sales of finished goods. transport cost.
12. CASH FLOW FROM NON-OPERATING
ACTIVITIES FROM FINANCE & INVESTMENT.
INFLOW OUTFLOW
Proceeds from ipo or bond. Share issue expenses..
Proceeds from borrowings. Payment of debts,dividends..
INFLOW OUTFLOW
Sale of assets. Purchase of fixed assets.
Dividends received. Purchase of investments.