capital and revenue transactions

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
What is the difference between a capital and a revenue transaction?<BR><BR>I have a question that asks me to place the following in the capital or revenue transaction column.<BR><BR>1. Purchase of Office stationery<BR><BR>2. Decoration of offices<BR><BR>3. Purchase of a delivery Van<BR><BR>4. Purchase of fuel for the delivery van<BR><BR>Any ideas?<BR>

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    capital and revenue transactions

    1. Revenue<BR><BR>2. Revenue<BR><BR>3. Capital<BR><BR>4. Revenue<BR><BR>The three for revenue are (as far as I can remember) down to the fact that they will be used up. (nothing left at the end. The van is capital as it will be worth something at the end (theoretically) tho most vans aren't worth anything after being run in to the ground by white van man ;o)<BR><BR>There will be someone who can probably explain this better but I hope this helps.<BR><BR>Nick
  • System
    System Posts: 100,534 🤖 Admin 🤖
    capital and revenue transactions

    Hi<BR><BR>1- Revenue transaction<BR>2- Revenue (unless offices are brand new then it is capital)<BR>3- Capital<BR>3- Revenue<BR><BR>Capital transactions are for items expected to last for longer than a year, they are assets to the company. Revenue transactions are for the day to day running of the business. This is why point 2 can be capital or revenue depending upon whether you are doing up an existing building (which would be a day to day expense so revenue), or decorating a new asset, ie an extension or newly acquired premises (which would be a capital expense).<BR><BR>Hope this makes sense!<BR><BR>Tracy
  • System
    System Posts: 100,534 🤖 Admin 🤖
    capital and revenue transactions

    Thats helped a lot, thanks Nick<BR><BR>Chris.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    capital and revenue transactions

    And thanks Tracey that was a big help too.<BR><BR>Chris.

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