Question
Distinguish between:
- Capital Expenditure and Revenue Expenditure
| Basis | Capital Expenditure | Capital Expenditure | |
| 1 | Purpose | It is incurred for acquisition of fixed assets for use in business. | It is incurred for running of business. |
| 2 | Capacity | It increases earning capacity of the business. | It is incurred for earning profits. |
| 3 | Period | Period Its benefit extends to more than one year. | Its benefit is exhausted within the year. |
| 4 | Recording | It is debited to related Asset Account | It is debited to related Expense Account. |
| 5 | Natue of Account | Nature of it is an Asset Account. | It is an Expense Account. |
| 6 | Depiction | It is shown in the Balance Sheet. | It is shown in the Trading or Profit and Loss Account. |
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