difference between capital and revenue expenditure where a capital expenditure results in an addition to an asset account whereas a revenue expenditure results in an addition to an expense account. Capital expenditures are payments for asset alterations, additions and replacements where revenue expenditures benefit a current period and are made for maintaining assets with routine repairs or
. replacment of a minor part. A capital expenditure will benefit two or more acounting periods through depreciation process and expenses for future accounting periods. A capital expenditure recorded as a revenue expenditure will cause an understatement of net income in that year. When expensing an item, it goes into the expense side of the income statement whereas capitilizing an item will be processed on the balance sheet.
