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Explain differences: Capital expense and Revenue expense:

Vidyadip · Accepted Answer

Point Capital Income Revenue income 1. Meaning An expense which is not incurred regularly and the benefit of which is to concern for a longer period of time and through which the concerns accquires fixed assets is the capital expense. To run a routine activity of the concern, expense which is incurred and benefit of which is available to the concern for the current year is the revenue expense. 2. Objective The objective of the capital expense is either to accquire fixed assets and with their help to create facilities to generate income. The objective of revenue expense is to run activities to the concern. 3. Presentation in accounts Capital expense is disclosed on the asset side of balance sheet. Revenue expense is disclosed on the debit side of income-expenditure account. 4. Balance Every year the balance of capital expense is carried forwarded. Revenue expense are transferred to income expenditure account. 5. Profit of expense Capital expense's profit is for long time. Revenue expense's profit is for only that year. 6. Limit Capital expense is done once only. Revenue expense is done regularly. 7. Description At the end of accounting year, depreciation is calculate on capital expense At the end of accounting year, depreciation is not calculate on revenue expenses. 8. Give information From capital expense, know the financial situation of the concern. From revenue expense, know the profit or loss of the concern. 9. Examples Fixed assets purchase of land, building, machine, furniture and their installation expense etc. Routine administrative expenses like salary, postage, stationery etc.

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Point	Capital Income	Revenue income
$1.$ Meaning	An expense which is not incurred regularly and the benefit of which is to concern for a longer period of time and through which the concerns accquires fixed assets is the capital expense.	To run a routine activity of the concern, expense which is incurred and benefit of which is available to the concern for the current year is the revenue expense.
$2.$ Objective	The objective of the capital expense is either to accquire fixed assets and with their help to create facilities to generate income.	The objective of revenue expense is to run activities to the concern.
$3. $ Presentation in accounts	Capital expense is disclosed on the asset side of balance sheet.	Revenue expense is disclosed on the debit side of income-expenditure account.
$4.$ Balance	Every year the balance of capital expense is carried forwarded.	Revenue expense are transferred to income expenditure account.
$5. $ Profit of expense	Capital expense's profit is for long time.	Revenue expense's profit is for only that year.
$6.$ Limit	Capital expense is done once only.	Revenue expense is done regularly.
$7.$ Description	At the end of accounting year, depreciation is calculate on capital expense	At the end of accounting year, depreciation is not calculate on revenue expenses.
$8.$ Give information	From capital expense, know the financial situation of the concern.	From revenue expense, know the profit or loss of the concern.
$9. $ Examples	Fixed assets purchase of land, building, machine, furniture and their installation expense etc.	Routine administrative expenses like salary, postage, stationery etc.

1	$Rs.20,000$ deposited with bank and opened account.
2	A cheque of $Rs.5,000$ received from Hari, which immediately deposited with bank.
3	A cheque of $Rs.2,000$ received from Ramanlal for dues.

P2 C9 Accounts ol‘Non—trading Concerns — Account STD 11 Commerce — Question

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