Capital and revenue expenditure
Capital expenditure is expenditure incurred on the purchase, alteration or improvement of Non current assets. Costs such as:
- Delivery of non current assets
- Installation of non current assets
- Improvement but not repair of non current assets
- Legal costs of buying a property
A common example is the purchase of a car for use in the business.
Revenue expenditure is expenditure incurred on running expenses. such as:
- Maintenance and repair of non current assets
- Staff and training costs
- Administration of the business
- selling and distributing the goods/products the business trades.
An example is the cost of petrol/diesel for the car used in the business.
Capital and revenue expenditure differences
Capital expenditure is shown on the balance sheet.
Revenue expenditure is an expense in the income statement.
Capital expenditure Revenue expenditure
Property - cost of property insurance of property
cost of extension general maintenance
installation of utilities repairs
legal fees redecoration
Vehicles- cost of vehicle fuel
delivery costs tax disc
number plates insurance of vehicle
changes to vehicle servicing and repairs
Machinery/ Cost of asset servicing or repairs
Computers/ installation and testing staff training
Office equipment- modifications insurance of asset