Help with revenue expenditure, capital expenditure, revenue income and capital income

Good evening,

I was wondering if anybody had any tips on how to remember what goes into revenue expenditure, capital expenditure, revenue income and capital income.
I seem to be struggling remembering what goes into each section, for an example the finale question on the practice exam 2, processing bookkeeping transactions. I was wondering if there is a simple way of remembering this?

Kind Regards
Bradley
I'm currently studying AAT Level 4! as part of my Finance Apprenticeship

Comments

  • ariadneariadne Posts: 218Registered
    Revenue items are short life items used in the course of the business, usually used within one reporting period such as 12 months. It gets more complicated in other levels but this is fine for L2. So cheap items may be used longer than that but aren't substantial enough in value for classing as Capital (eg a stapler) or Capital items planned to be sold within the next period will be classed as Revenue.

    Capital items are assets which are used/owned long term in the business - over 12 months for example. Buildings, machinery, computers, storage units, furniture (over a value decided by the company which is introduced at L3). These are not items used to provide an income for the business directly. Capital expenditure is buying a long term (higher value) item to be used for over one period (usually 12 months for AAT) and income is the proceeds of sale of these items.
    amy256siyabuswa
  • BradleyClaridgeBradleyClaridge Posts: 30Registered
    Good evening,

    I was just wondering what Insurance would be classed as? Would it be capital expense?

    Kind Regards
    I'm currently studying AAT Level 4! as part of my Finance Apprenticeship
  • TooManyMusketsTooManyMuskets Posts: 1Registered
    Insurance is something you pay for on an ongoing basis, typically monthly or yearly, so it would be classed as a revenue expense along with the rest of your bills.
    amy256
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