In the previous lessons pertaining to the preparation of profit and loss account, the reader would have had an exposure to the concepts relating to expenses, expenditure and incomes.
The term expenditure is a broad term and it is classified into capital expenditure, revenue expenditure and deferred revenue expenditure. All incomes are not receipts and all receipts are not incomes. For example, under accrual or mercantile system of accounting even income earned but not received is treated as income. Similarly all receipts are not recognised as incomes. This lesson deals with the classification of capital and revenue expenditure and receipts.Learning
Objectives
After reading this lesson the reader should be able
to:
ՖՖ Understand
capital expenditure
ՖՖ Distinguish
capital expenditure from revenue expenditure
ՖՖ Identify
capital receipts and revenue receipts
Capital Expenditure
Revenue Expenditure
Distinction Between Capital And Revenue Expenditure
Deferred Revenue Expenditure
Capital And Revenue Profits, Receipts And Losses
Illustrations