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In every business, let it be trading or service type of business, we use to make various types of expenses.
The main aim behind paying any expense is to get benefit now that benefit may last longer or shorter.
For example if we pay salary the benefit will be about one month or if we pay rent the benefit will be one
month, so all those expenses the benefit of which is exhausted within a year is a revenue expenditure
on the other hand if the benefit of expenses is for longer period i.e. more than a year is capital expenditure, for example amount paid for purchase of asset like building machinery etc. is a capital expenditure because benefit will be enjoyed more than a year.
The important point to be noted here is that amount is not at all a focus point so as to decide a expenditure as capital or revenue. Some time small amount of expenses may be capital and large amount may be revenue and vice versa.
Economy the best term to capital expenditure
