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Revenue Expenditure

Revenue expenditures are shown in the profit and loss A/c as their benefits are for one accounting period. It is an expenditure incurred to maintain the productivity or earning capacity of a business. It is incurred to carry out operating activities in the normal course of business. It does not yield benefits beyond one accounting period. It has to be deducted from revenue or income to ascertain net income or net profit. Revenue expenditure is debited to Trading / Profit and Loss Account. All those expenses which are incurred for running the business and to maintain the fixed assets are revenue expenses.


Example: Telephone charges, postage, repairs, purchase of raw material, goods, etc.


Example: Say a company buys a typewriter for ₹ 3,000 which has expected life of 3 years. So, the expected utilisation for each year let’s say will be ₹ 1,000 each. Below is the table showing the portion to be treated as revenue and capital expenditure



Profit & Loss Account

Balance Sheet


1000 as benefit for current year

2,000 as will yield benefit beyond 1 year


1000 as benefit for current year

1,000 as will yield benefit beyond 1 year


1000 as benefit for current year

Nil – As will not yield any benefit beyond the current year.


Hence, both capital and revenue expenditures are ultimately transferred to Profit and Loss account.

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