Capital and Revenue Expenditure

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
<BR>Please can someone explain the difference between capital and revenue expenditure so I can understand it better.<BR><BR>I know what all asset are clarified as revenue as work unless over £500 and then they become capital expenditure but only on fixed assets.<BR><BR>If anyone can help, I would be much appreciated.<BR><BR>I need to put a statement in my portfolio and the difference.<BR><BR>Foundation student.<BR><BR>Regards<BR><BR>Lisa

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Capital and Revenue Expenditure

    Capital expenditure is expenditure to acquire a fixed asset. Revenue expenditure is the day to day running costs incurred by the business. Fixed assets of a business are the assets that were purchased with the intention of being for long term use in the business e.g machinery, cars, computers. <BR><BR>Improvement costs of fixed assets are also capital expenditure but maintenance/repair costs are revenue expenditure.<BR><BR>Capital expenditure goes to the balance sheet, revenue to the profit and loss. Legal costs in connection with the purchase of fixed assets can also be capitalised, i.e go to the balance sheet, as can surveyors fees and installation costs.<BR><BR>Hope this helps.<BR>

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