Difference Between Capital Expenditure and Revenue Expenditure
| Capital Expenditure | Revenue Expenditure | |
| Example | Cost of Machinery Cost of Building | Cost of labour (Wages),Cost of Manager ( Salary)Rent of Building |
| Purpose /Need | It is incurred for the acquisition/acquiring or improving fixed assets of the business.Not meant for resellMay add to the value of an existing asset | It is incurred for running of business. It is routine expenditure incurred in normal course of business.Includes Cost for sale Maintenance of fixed assets |
| Period | Its benefit extends to more than one year. | Its benefit is exhausted within the accounting year |
| Capacity | Increases earning capacity | Maintain the earning capacity |
| Nature | Non-recurring outlay | Recurring outlay |
| Account Name | Asset Account | Expenses Account |
| Nature of Account | Real Account | Nominal Account |
| Debited | To an asset account | To an expenses account |
| Financial Statement | Asset side of Balance Sheet | Debit side of Trading and profit & Loss Account |
Sarita Chugh M.Com, B.Edan is Accounts and Economics teacher having more than 30+ years of experience. She is Edupreneur and founded Unique Learning Academy in 2004. She believes that every child has the right to affordable education.
