A capital expenditure includes all costs incurred on the acquisition of a fixed asset along with subsequent expenditures that increase the asset's earning capacity, while revenue expenditure only includes costs that are aimed at maintaining fixed assets and not enhancing earning capacity. The distinction between capital expenditure and revenue expenditure is important because only capital expenditures are included in the cost of a fixed asset.Continue Reading
Capital expenditure includes all costs of acquisition, such as delivery, legal charges, installation, upgrade and replacement costs. Capital expenditure is generally of a one-off expense, and its benefit is derived over several accounting periods. For example, the cost of replacing a conveyor belt on an assembly line is a capital expenditure. For accounting purposes, a capital expenditure requires a debit to the fixed asset account and a credit to accounts payable.
Revenue expenditure includes the costs of maintaining a fixed asset, such as repair, repainting and renewal costs. These costs are incurred on a regular basis, and their benefits are obtained over a relatively short period of time. Since revenue expenditures do not show up in the cost of a fixed asset, they are expensed in the income statement for the period in which they are incurred. Therefore, a revenue expenditure requires a debit to the income statement and a credit to accounts payable.Learn more about Accounting
Fiduciary funds are used to account for assets held in a trustee or agency capacity for others, and therefore cannot be used to support the government's own programs. Fiduciary funds reporting focuses on net position and changes in net position. There are four types of Fiduciary funds: agency funds, private-purpose trust funds, investment trust funds and pension trust funds.Full Answer >
Almost everything that is owned for personal or investment purposes is a capital asset; therefore, income from the sale of such assets counts as capital gains, according to the IRS. Examples of capital assets include household furnishings, a home, and bonds or stocks held as investments.Full Answer >
A person can calculate capital allowances by taking the costs associated with the purchase of certain business assets and then deducting those costs from pretax profits, notes GOV.UK. Specific assets eligible for the capital allowance deduction include equipment, machinery and business vehicles.Full Answer >
Total expenditure is an economic term used to describe the total amount paid on one or more products in a given period, according to AmosWEB. To calculate the total expenditure multiply the quantity of the product purchased by the price at the time it was purchased.Full Answer >