Concept Of Capital And Revenue Expenditures And Their Related Items

Concept Of Capital And Revenue Expenditures And Their Related Item

Any expenditure incurred in connection with the operation and administration of daily activities of the business is called revenue expenditure. Revenue expenditure is incurred for maintaining earning capacity and working efficiency of the fixed assets. Revenue expenditure is incurred for acquiring merchandise for resale either in its original or improved form. Its benefit expires within a year. Revenue expenditure is shown on debit side of the trading and profit and loss accounts.

Items relating to revenue expenditure

* Expenditure incurred in acquiring raw materials for manufacturing process or finished goods for resale.
* Wages and all other items of manufacturing expenses
* All items of office, administration, selling and distribution expenses
* Repair, maintenance, and depreciation of all the fixed assets.
* Interest on loan and other financial expenses.