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What are expenses categorised into?
Expenses are categorised into:
1. Capital expenditure
2. Revenue expenditure
What are incomes/Receipts categorised into?
Incomes/Receipts can be categorised into:
1. Capital receipt
2. Revenue receipt
What is capital expenditure?
Capital expenditure is the expenditure incurred in the purchase, acquisition, extension or renovation of a non-current asset, which will be used in the business for a very long period of time and which help to increase the earning capacity of the business.
Capital expenditure also includes expenses such as:
1. Legal costs incurred in the Purchase of a non-current asset.
2. Cost of installation of the non-current asset to put the non-current asset in a working condition.
3. Cost incurred in the delivery of the non-current asset.
Learn
State 5 examples of capital expenditures.
Examples of capital expenditures:
1. Purchase of motor vehicles
2. Extension to building
3. Legal costs incurred in the acquisition of land
4. Cost of installing the network system
5. CCTV cameras for surveillance
Where are capital expenditure items recorded in the sofp?
Capital expenditure items will be recorded in the sofp under the non-current assets section.
What is revenue expenditure?
Revenue expenditure refers to the expenses incurred during the day-to-day activities of the business in order to keep the business in a state of efficiently. These expenses are recurrent items that is the business will spend money on these items very frequently.
Revenue expenditure includes cost such as:
1. Administrative costs
2. Selling costs
3. Distribution costs
4. Costs incurred the maintenance of non-current assets
5. Costs incurred in the purchase of goods for resale.
State 6 examples of revenue expenditure.
Examples of revenue expenditure:
1. Wages and salaries
2. Electricity bills
3. Stationery
4. Travelling expenses
5. Motor vehicles expenses
6. Legal costs incurred in dept collection
Where are revenue expenditure items recorded?
Revenue expenditure items are recorded to the income statement either in the trading account section or the profit and loss section.
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