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    ssmith89's Avatar
    ssmith89 Posts: 10, Reputation: 1
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    #1

    Dec 18, 2009, 03:08 PM
    What is capital expenditure?
    I'm just after a good solid definition of the two terms mentioned above! I have looked but all the terms I have found so far or too vague! Help
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
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    #2

    Dec 19, 2009, 03:16 AM

    There should not be any vagueness.
    Expenditure is easy to define.
    In Accounting it is portrayed as a DEBIT.
    The DEBIT can be either the spending on ASSETS or EXPENSES.

    When the expenditure is on ASSETS, this is said to be a CAPITAL EXPENDITURE.
    Also referred to as capitalising the
    Expenditure.
    ssmith89's Avatar
    ssmith89 Posts: 10, Reputation: 1
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    #3

    Dec 20, 2009, 03:29 AM

    Si revenue expenditure is on`
    ssmith89's Avatar
    ssmith89 Posts: 10, Reputation: 1
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    #4

    Dec 20, 2009, 03:57 AM

    So revenue expenditure is on temperary items i.e. petrol etc?
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
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    #5

    Dec 20, 2009, 04:08 AM

    You are getting confused by using
    Certain language which is NOT used
    In accounting.
    There is no such phrase as revenue
    Expenditure.

    Revenue is money coming IN
    Expenditure is money going OUT.
    They are on opposites side of the coin.
    Revenues are CREDITS.
    Expenses are DEBITS.

    Yes as an example petrol is an expense.
    Yes as an example sales is a revenue.
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
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    #6

    Dec 20, 2009, 06:49 AM

    The following definitions have been taken from Free Online Accounting Course | AccountingCoach.com

    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.

    Mr. Rolcam, please visit the following link

    What is a capital expenditure versus a revenue expenditure? | AccountingCoach.com Q&A
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