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Distinction between Capital Expenditure and Revenue Expenditure



Capital Expenditure

Revenue Expenditure

1.  Purpose

acquisition of fixed assets

It is incurred for conduct of business.


For use in business.


2.  Capacity

It increase the earning capacity of the

It is incurred for earning profits.




3.  Period

It’s benefit extend to more than one year.

It’s benefit extend to only one year.

4.  Depiction

It is shown in the Balance sheet.

It is part of Trading or Profit & Loss Account.


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