HSC Commerce (Marketing and Salesmanship) 12th Board ExamMaharashtra State Board
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Distinguish Between the Following.Revenue Expenditure and Capital Expenditure. - HSC Commerce (Marketing and Salesmanship) 12th Board Exam - Economics

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Question

Distinguish between the following.

Revenue expenditure and Capital expenditure.

Solution

Revenue expenditure and Capital Expenditure:-

A capital expenditure is an amount spent to acquire or improve a long-term asset such as equipment or buildings. Usually the cost is recorded in an account classified as Property, Plant and Equipment. The cost (except for the cost of land) will then be charged to depreciation expense over the useful life of the asset.

A revenue expenditure is an amount that is expensed immediately—thereby being matched with revenues of the current accounting period. Routine repairs are revenue expenditures because they are charged directly to an account such as Repairs and Maintenance Expense. Even significant repairs that do not extend the life of the asset or do not improve the asset (the repairs merely return the asset back to its previous condition) are revenue expenditures.

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APPEARS IN

 2014-2015 (March) (with solutions)
Question 3.1.6 | 2.00 marks
 2015-2016 (July) (with solutions)
Question 3.1.6 | 2.00 marks
Solution Distinguish Between the Following.Revenue Expenditure and Capital Expenditure. Concept: Allocation of Resource and Economic Variable.
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