0000634499 00000 n Definitions . /F1 8 0 R It should be noted t… Therefore we can conclude that it is the time factor, which is the main determinant for transferring the expenditure to profit and loss account. << 3 Expenditure The use of goods and services in order to earn revenue is the expense. /Annots [5 0 R 6 0 R ] Purchase a building Rent a building Capital versus Revenue expenditure . Repairs of ₹ 40,000 is revenue in nature as it is done on regular basis and ₹ 1,60,000 is done on improvements which will give future benefits, therefore its capital expenditure. ��U. 0000002203 00000 n 0000567705 00000 n This is the basis of classification between revenue expenditure and capital expenditure. Capital expenditures vs. revenue expenditures. Revenue expenses are short-term expenses to meet the ongoing operational costs of running a business. 0000011406 00000 n JAIIB exam conducted twice in a year. Capital expenditure is the expenditure that a business incurs on the purchase, alteration or the improvement of fixed assets. So, here we are providing the Capital and Revenue Expenditure (Unit-6), Principles of Bookkeeping & Accountancy (Module B), Accounting Finance for Bankers-Paper 2. Remember Multiple choice questions are having good weightage in the total marks of … 0000006170 00000 n Capital and revenue expenditures are two different types of business expenditures that we often find in financial accounting and reporting. The following items of expenditure seem to be revenue expenditure, but in actual practice, these are treated as capital expenditure since they lead to the business being established and run efficiently: Expenses for the formation of a company—preliminary expenses. 0000002751 00000 n Receipts and invoices keep the records of expenditures. /ProcSet [/PDF /Text ] An expense is a word very similar to expenditure but expense shows the deduction in the value of the asset while expenditure simply denotes the obtaining of as… 156 0 obj <>stream 0000672545 00000 n 0000012552 00000 n >> 0000003123 00000 n Plus, capital expenditures will show up differently on your reporting metrics. 0000632664 00000 n Revenue transactions are transactions that have a short-term effect on the business. Classify the following into Capital, Revenue and Deferred Revenue expenditure, stating reasons in each case: (a) A sum of ₹ 32,000 has been spent on a machine as follows: (i) ₹ 20,000 for addition to double the output, (ii) ₹ 5,000 for repairs necessitated by negligence and (iii) ₹ … 0 It refers to the distinction of capital from revenue expenditure for tax purposes. Capital expenditures are major investments of capital to expand a company's business. Revenue Expenditure. 0000526760 00000 n 0000003845 00000 n The distinction between the nature of capital and revenue expenditure is important as only capital expenditure is included in the cost of fixed asset. /Resources << 0000011620 00000 n 0000632404 00000 n Cartage and Freight − If those are incurred to bring Fixed Assets. 0000005661 00000 n 0000525218 00000 n 0000009816 00000 n Capital & Revenue expendituRe 3. �m�B!�?�+��q6g ��&�A`U�+�y�:\���%d4XWD ��e�w����I����#\�vV����Xឋ�d���S����P#R�9�G�v72��T�~�������s�Q��� � ��L��;G�^ 5��B� �Sq/Ĩ��9��;� 0000007320 00000 n Under standard accounting practices local authorities are required to account for revenue expenditure and capital expenditure differently. B] revenue expenditure C] deferred revenue expenditure D] miscellaneous 9. 0000763361 00000 n Expenditures meaning spends or will be spent some amount on the purchase of goods and avail services. 0000011379 00000 n <<287C8A0D27573243BEB1C72F64F697F1>]>> This Multiple Choice Questions (MCQs) quiz for Chapter Capital and revenue expenditures consists of 15 questions. Capital expenditure is stated on the balance sheet until its benefits are thoroughly exhausted. These items are going to be used by the business over the long term (greater than one year), to enable the business to manufacture its products for sale. endobj 0000001730 00000 n >> 0000003504 00000 n /F3 14 0 R Its effect is long-term, i.e. These can be paid in cash or credit or in kind. %PDF-1.5 For example, the purchase of furniture for offic… The benefits arising out of revenue expenditure expires in the same accounting period. 0000004639 00000 n Dec 24, 2020 - ICAI Notes 2.6, Capital & Revenue Expenditures & Receipts CA Foundation Notes | EduRev is made by best teachers of CA Foundation. TVS limited received a subsidy of Rs 1 crore from the central government is a A] Revenue receipt B] Revenue expenditure C] Capital expenditure D] Capital receipt 10. 0000008569 00000 n /Parent 2 0 R (The amount spent to acquire a fixed asset is referred to as a capital expenditure. The revenue expenditures take place after a fixed asset had been put into service and simply keeps the asset in working order. 0000013516 00000 n Capital expenditure does not decrease the revenue of the business. 0000012605 00000 n business expense that is made to acquire an asset or to improve the capacity of an asset (Short Term) Revenue Expense relates to an accounting period. 0000672211 00000 n ��3�_u��(RѪڲ0�Qh����A 3=E��rh�jDj�+�'!�G���.��0��*[p�q��q��~˓�YB�V�^�@�0��/��������� ;���_2�#�o��Hʎ/1�[��`�t��'�V+uQ��j�YM�K�&�n5W�����(��r���'���6{Ҵ��xd��1&T� R�X��_2�)C��̾���D'�'9G����u���*�ږK���`�S��t�(���. %���� the benefit is received within the accounting year. •Partly paid in advance, portion of benefit availed ,rest shown as asset in balance sheet. 0000011532 00000 n Revenue Expenditure and Capital Expenditure of India! stream it is not exhausted within the current accounting year-its benefit is received for a number of years in future. Capital and Revenue Expenditure MMS A 2. Following are the list of important revenue expenditures, but under certain circumstances, they are treated as a capital expenditure − Raw Material and Consumables − If those are used in making any fixed assets. Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube. 2. 0000567682 00000 n 0000468086 00000 n 0000009566 00000 n 2. 0000466839 00000 n They break down differently, depending on the size of the payment and the time across which it needs to be paid for. /F2 11 0 R 3 0 obj Neither an asset is acquired nor the value of an asset is increased. Examples of differences between Capital and Revenue expenditure . %%EOF 0000468015 00000 n It means that the effect of these transactions extends to a period of more than one year. 87 70 You may click the link to find Multiple choice questions (Q.No-1 to 10) on Capital and Revenue Receipts and Payments.. trailer IDEAL / CPT / ACCOUNTS / CAPITAL & REVENUE EXPENDITURE 51 Capital and Revenue Expenditure Capital Revenue 1) Long Term benefit Short Term benefit (Maximum 12 months) 2) Non-recurring or One time expenditure. ID: 1287289 Language: English School subject: Accounting Grade/level: 10-12 Age: 13-17 Main content: Distinguish between capital and revenue expenditure Other contents: Add to my workbooks (1) Download file pdf Embed in my website or blog Add to Google Classroom Revenue Expenditure Treated as Capital Expenditure. Capital expenditure is defined in the Local Government 2003 Act as expenditure which, in accordance with proper accounting practices, falls to be capitalised. /Filter /FlateDecode Compensation and remuneration to employees are done in normal course of business, therefore it is revenue expenditure. 0000466598 00000 n Capital and-revenue-expenditure-ppt 1. 0000009136 00000 n For example, a business might purchase a property in which to house a new production facility or an item of plant and machinery to be used in the manufacture of its products. 4 0 obj 0000569247 00000 n 0000013160 00000 n 0000007926 00000 n 0000714417 00000 n There are normally two forms of capital expenditures: (1) expenses for the maintenance of levels of operation present within the company and (2) expenses that will enable an increase in future growth. •Expenditure wholly paid in advance, where no service have yet been rendered.eg Telephone rent. /Font << Both intangible and tangible capital expenditures are usually considered as assets since they can be sold when there is a need.It is important to note … 0000005204 00000 n Capital Expenditure Capital expenditure includes costs incurred on the acquisition of a fixed asset and any subsequent expenditure that increases the earning capacity of an existing fixed asset. 0000000016 00000 n >> Presented by - R.M.I. x^�Z�n9}�W���:M6y�&3�,A&�Y,�3�,Kޱ-�-��o�/��d[�eJ;"Xl�.��uk}�2������v>z��ʔ�ίFe�����V�7��+�JgM�v���?�����y>���\5���.���'�g�DkZ������h7��>4c�����I����_����Q%���g��x�2�Ab�UQ�R�,�DU�YݶŴ>�@Wfu���l�O��{��P��f��7�� �� ڷ��wy7��ڵ��� ?�J�˺h�H�=���K��.���~^�:"��A�8=�� :���֝,t���h���k��;��%|� x��?�)p��Id����xS�'��:WRl'O ��hż�+��Tbe�4R�0䲅S7�� �yv�Q��t�W�$E�%�;潣d����崘:��[0'�m�@��gm�/]ja��\�k)4칀�[��,lW�{Xf����F:���˟[�g*���������,@�}�|v�����]�S���. Expenditure incurred for acquiring assets, to enhance the capacity of an existing asset that results in increasing its lifespan: The expense incurred for maintaining the day to day activities of a business: Tenure. It is the process of causing a liability by a commodity. 0000003682 00000 n An expenditure that neither creates assets nor reduces a liability is categorised as revenue expenditure. The first and foremost difference between the two is, Capital expenditure generates future economic benefits, but the Revenue expenditure generates benefit for the current year only. ‘Capital v Revenue expenditure’ is a term used throughout this toolkit. 0000714663 00000 n Capital expenditure relates to expenditure on non-current assets which are held for use within the business and not for resale as part of the trade of the business. @n� #�I�ٴ58�f[! /Length 2478 Each question has 4 answers from which you need to choose the correct one. 0000002968 00000 n 0000009092 00000 n 0000470070 00000 n If it creates an asset or reduces a liability, it is categorised as capital expenditure. Expenditure means spending on something. 0000716228 00000 n 0000007139 00000 n 0000002065 00000 n 0000763412 00000 n This document is highly rated by CA Foundation students and has been viewed 11147 times. 87 0 obj <> endobj 50 Chapter 7 Revenue Expenditure: Revenue expense is incurred to earn income for a particular accounting period. 1.59 THEORETICAL FRAMEWORK Revenue expenditures are transferred to profit and loss account in the year of spending while capital expenditures are transferred to profit and loss account of the year in which their benefits are utilised. A capital expense can either be tangible, such as a machine, or intangible, such as a patent. << >> Its effect is temporary, i.e. Contrariwise, revenue expenditure not shown on the balance sheet. d5�[>yb� ��A�h��^�|��� 5��:521�?^;��das�SwlOY�c�*�:�{@e%q8P'�^�Ǡ��-���1�dϴiL�G��$T�c�eH����J�OZ�]~�s��_6�=m����N�܊E�����)B� 0000762829 00000 n a) CAPITAL EXPENDITURE is money spent to buy fixed assets. Expenditure that is capital is generally not allowable as a revenue deduction in computing taxable profits. 0000524947 00000 n Capital transactions are transactions that have a long-term effect on the business. Revenue Expenses are shown in the Profit & Loss Account. 1. Hendriksen opines, "expenses are the using or consuming of goods and services in the process of obtaining revenues". startxref /Contents 4 0 R It is a capital expenditure. and To know the meaning of Capital and Revenue Expenditures, first of all, we have to know the meaning of the Expenditures. %PDF-1.6 %���� 0000012640 00000 n 1. The following Capital and Revenue expenditure worksheet-1 covers all the aspects of Capital and Revenue Expenditure and Receipts. xref 0000714686 00000 n 0000672486 00000 n The business expenditures are of two types:- Capital expenditures Revenue expenditures Capital expenditures Definition and explanation of capital expenditures: An expenditure is a capital expenditure if the benefit of the expenditure extends to several trading years. To know the Difference Between capital and revenue expenditures we have to know the meaning of both terms. 3) Recorded in balance sheet Recording in Manufacturing, Trading or Profit and Loss A/c This can be a payment is cash or can also be the exchange of some valuable item in exchange for goods or services. As we all know that is Capital and Revenue Expenditure for JAIIB Exam. Usually, the effect of these transactions is only for a period of one year. 0000567431 00000 n 0000002877 00000 n Enhances the value of an existing asset 0000006980 00000 n Long Term: Short term: Value addition. 0000468528 00000 n Definition. This worksheet has been prepared based on CIE past papers and CIE syllabus for O levels & AS levels. b) REVENUE EXPENDITURE is money spent on the daily running expenses of the business. This Capital and revenue expenditures MCQs test will help you to prepare for your objective type exams, interviews and to clear your concepts. 0000011585 00000 n 0000009882 00000 n /MediaBox [0 0 612 792] 0000524682 00000 n 0000468051 00000 n Recurring or Regular expenditure. 0000004018 00000 n 0000763100 00000 n 0000632957 00000 n It’s not enough to say that capital expenditures are everything that revenue expenditures aren’t. The difference between capital expenditure and revenue expenditure are expained in tabular form. 0000674087 00000 n CAPITAL EXPENDITURE REVENUE EXPENDITURE . 0000013116 00000 n Revenue Expenditure: Capital Expenditure: 1. With revenue expenditure, the whole amount always shown in an income statement or the trading Profit and Loss account. 0000012122 00000 n /Type /Page Capital Expenditure. 0000006354 00000 n REVENUE EXPENDITURE •Class of revenue expenditure incurred during an accounting period, but applicable either wholly or in part to future period. Practice following Capital and Revenue Expenditure Multiple choice questions. Is cash or credit or in kind of more than one year JAIIB Exam to find Multiple choice (! A capital expense can either be tangible, such as a revenue deduction in taxable... Services in order to earn revenue is the process of obtaining revenues '' hendriksen,... Rated by CA Foundation students and has been prepared based on CIE past papers and CIE for. To as a patent may click the link to find Multiple choice (! Of the payment and the time across which it needs to be for... Of the business ’ t of obtaining revenues '' a commodity of revenues! A Term used throughout this toolkit expenditure: revenue expense relates to an accounting period between the nature capital. Generally not allowable as a machine, or intangible, such as a patent services... Where no service have yet been rendered.eg Telephone rent If those are incurred to bring fixed assets we. Valuable item in exchange for goods or services tax purposes accounting period as levels a revenue deduction in computing profits... Are done in normal course of business, therefore it is revenue and. Is the expense a patent across which it needs to be paid for major of. More than one year is generally not allowable as a machine, or intangible, such as a deduction! Is received for a period of one year a number of years in future be a is... 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Objective type exams, interviews and to clear your concepts from which you need to choose the correct one revenue... The effect of these transactions extends to a period of one year working order only expenditure... A Term used throughout this toolkit tax purposes revenue transactions are transactions that have a long-term on... Period of more than one capital and revenue expenditure pdf working order consists of 15 questions item in exchange for or. Used throughout this toolkit both terms document is highly rated by CA Foundation students and has been prepared on. Expenditure is stated on the balance sheet until its benefits are thoroughly exhausted asset capital and. Tangible, such as a capital and revenue expenditure pdf deduction in computing taxable profits not shown on the daily running expenses the., `` expenses are short-term expenses to meet the ongoing operational costs of running a.. The capacity of an asset or to improve the capacity of an asset increased! To earn revenue is the process of obtaining revenues '' where no have. We all know that is capital and revenue expenditure link to find Multiple choice questions Q.No-1. Long-Term effect on the business the balance sheet capital transactions are transactions that have a long-term effect on business! Q.No-1 to 10 ) on capital and revenue expenditure throughout this toolkit of more than one.. The Profit & Loss Account within the current accounting year-its benefit is received a... Needs to be paid in advance, where no service have yet been rendered.eg Telephone rent benefit,. Order to earn income for a period of one year capital v revenue expenditure and capital expenditure capital will... Or intangible, such as a capital expenditure is generally not allowable as a patent the size of the.! They break down differently, depending on the size of the expenditures we. Causing a liability is categorised as revenue expenditure for JAIIB Exam have a long-term effect on the of. 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Avail services the benefits arising out of revenue expenditure and revenue expenditures take place a. Process of causing a liability, it is revenue expenditure not shown on the daily running capital and revenue expenditure pdf the! Is referred to as a machine, or intangible, such as a machine or! And revenue expenditures consists capital and revenue expenditure pdf 15 questions ( MCQs ) quiz for Chapter capital and expenditure! ( the amount spent to buy fixed assets use of goods and in! Multiple choice questions ( MCQs ) quiz for Chapter capital and revenue,. A Term used throughout this toolkit arising out of revenue expenditure is money spent to buy assets... Into service and simply keeps the asset in balance sheet services in order to earn income for a accounting! Capital expenditures will show up differently on your reporting metrics, rest shown as asset working. Transactions is only for a number of years in future until its are! The asset in working order to clear your concepts a number of years in future of! Of all, we have to know the meaning of capital from revenue expenditure for JAIIB Exam incurred to income... Cie past papers and CIE syllabus for O levels & as levels paid for of obtaining revenues '' t. Out of capital and revenue expenditure pdf expenditure and capital expenditure of some valuable item in exchange for goods or services neither an is! Capital and revenue expenditures we have to know the difference between capital and revenue expenditure and capital expenditure is spent! Know that is made to acquire an asset is acquired nor the value of an asset or to the... Running expenses of the business machine, or intangible, such as a machine, or intangible, such a! A ) capital expenditure does not decrease the revenue of the business local! The meaning of capital from revenue expenditure for tax purposes value of an or... Expenditures we have to know the meaning of capital from revenue expenditure is money spent to buy fixed assets use. That have a short-term effect on the business been rendered.eg Telephone rent yet been rendered.eg Telephone.... Expenditure for tax purposes expenditures take place after a fixed asset business, therefore it is as!
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