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Revenue expenses are shorter-term expenses required to meet the ongoing operational costs of running a business, and thus are essentially the same as operating expenses. Unlike capital expenditures, revenue expenses can be fully tax-deducted in the same year the expenses occur. In relation to the major asset purchases that qualify as capital expenditures, revenue expenditures include the ordinary repair and maintenance costs that are necessary to keep the asset in working order without substantially improving or extending the useful life of the asset. Revenue expenses related to existing assets include repairs and regular maintenance as well as repainting and renewal expenses. Revenue expenditures can be considered to be recurring expenses in contrast to the one-off nature of most capital expenditures.
While Capital expenditures on the other hand represent major investments of capital that a company makes to maintain or, more often, to expand its business and generate additional profits. Capital expenses are for the acquisition of long-term assets, such as facilities or manufacturing equipment. Because such assets provide income-generating value for a company for a period of years, companies are not allowed to deduct the full cost of the asset in the year the expense is incurred; they must recover the cost through year-by-year depreciation over the useful life of the asset. Companies often use debt financing or equity financing to cover the substantial costs involved in acquiring major assets for expanding their business.
The purpose of capital expenditures is commonly to expand a company's ability to generate earnings, whereas revenue expenditures are more commonly for the purpose of maintaining a company's ability to operate. Capital expenditures appear as an asset on a company's balance sheet; revenue expenses are listed with liabilities ( Added or deducted from Equity).
Revenue expenditure benefits the firm for current accounting period.
Capital expenditure benefits the firm for more than one accounting period.
Revenue expense is for current period and is charged to profit and loss account.
Capital expense is incurred for long period of time and must be capitalized. It becomes the part of balance sheet.
Capital Expenditure is an amount spent to acquire or upgrade productive assets (such as buildings, machinery and equipment, vehicles) in order to increase the capacity or efficiency of a company for more than one accounting period. Also called capital spending. Revenue expense is expense incurred in relation to company's normal operations in pursuit of its business.
the basic difference between revenue expense is the cost which is accrued from the profit and the others one that is capital expense it is like fixed cost or we can say that it is one sort of investment such as for manufacturer the factory sat up is the capital expenses.
Capital Expenses is basically the cost of borrowing money (such as a loan) or raising capital through public shares ...
the term "Revenue expense" is not Accurate .. you may use "Operational expenses" which the expenses coming from the business/Company's main Activity.
Each is recorded separately in the Income Statement ... Although the Sales are included in the income statement ... the raised capital is of course recorded in it's correct place in the Liability section in the balance sheet.
Revenue expense is short term expense like any kind of repairing expenses. The expense by which no extra income will be generated is known as revenue expense.
Capital expenditure is long term and generated extra income.
Answer is revenue expense is of P&L nature and Capital Expense is of Balance Sheet Nature one is expense and another one is Asset respectively.
