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1. SUMAN ROY Deptt. Of Commerce Sonapur College Sonapur REVENUE EXP ENDITURE AND RECEIPTS UNIT -3 CAPITA L AN D

2. An expenditure is funds used by a business , organization , o r corporation to attain new assets, improve existing ones, or reduce a liability . In other words , it ’ s the use of a re source in the operations of a business. SUMAN ROY Deptt. Of Commerce Sonapur College Sonapur E XPENDITURES :

3. • CAPITAL EXPENDITURE • REVENUE EXPEND ITURE • DEFE RRED REVENUE EXPENDITUR E SUMAN ROY Deptt. Of Commerce Sonapur College Sonapur TYPES OF EXPENDITURE :

4. Capital expenditure is the expenditure which results in acquisition of an asset or which helps to increase in the earning capa city of a business. SUMAN ROY Deptt. Of Commerce Sonapur College Sonapur CAPITAL EXPEND ITURE MEANING : Example : Purchase of land , buil ding , machinery etc.

5. • Capital expenditure increases the value of f ixed assets . • Capital expenditure increases the prof it earning capacity of business. • Capital expenditure are non-recurring in nature. • Capital expenditure is ge nerally made for acquiring fixed assets. FEATURES OF CAPI TAL EXPENDITURES : SUMAN ROY Deptt. Of Commerce Sonapur College Sonapur • Capital expenditure generall y involve large amounts of funds .

6. Re venue expenditure incurred to meet the day to day expenses of th e concern is called revenue expenditure. SUMAN ROY Deptt. Of Commerce Sonapur College Sonapur REVENUE EXPENDITURE ME ANING : for resale , salaries , rent etc. Example : P urc hase o f goods

7. FEATURES OF REVEN UE EXPENDITURE : • Revenue expenditure are related to general op erating expenses . • Revenue expendit ure are related to short period . • Revenue expenditure do not add to the value of assets . • R evenue expenditure are show at the debit side ( accounting treatment ) o f trading an d profit & loss account. • Revenue expenditure i s that expenses are recurring in nature . SUMAN ROY Deptt. Of Commerce Sonapur College Sonapur

8. SUMAN ROY Dept . Of Commerc e Sonapur Colle ge Sonapur CAPITAL EXPENDITURE Expenses incurred in acquirin g fixed assets. REVENUE EXPE NDITUR E Expenses incurred for meeting expenses. DISTINCTION BETWEE N CAPITAL EXPENDITURE AND REVENUE EXPENDITUR E It may be incurred before the commencement of the business. POIN T S Meaning Shown at the assets side of the Balance Shee t. It is incurred only after the business. Shown on the debit side o f loss account. Incurre nce o f expenditure It is a non - recurring expenditu re. It is a recurring expendit ure. It represents unexpi red cost. It tepresents e xpired cost. commence ment o f tr ading/profit & Expenditure Accountin g treatment Cost

9. termed as ‘ Deferre d Revenue Expenditure’. Example : Advertising expendit ure , Discount on issue of debentures etc. Def erred revenue expenditures which are revenue in nature but the benefi t of which is likely to accrue to the entity incurring such expenditure are SUMAN ROY Deptt. Of Commerce Sonapur College Sonapur DEFERRED REV ENUE EXPENDITURE :

10. receipts consumers typically receive from vendors and service providers, receipts are also issued in business - to - business dealings as well as stock market transactions. A receipt is a written acknowledgmen t that something of value has been transferred from one party to another . In addition to the SUMAN ROY Deptt. Of Commerce Sonapur College Sonapur RECEIPTS :

11. TYPES OF RECEIPTS : CAPITAL RECEIPT S REVENUE RECEIPTS SUMAN ROY Deptt. Of Commerce Sonapur College Sonapur

12. Capital rece ipts means contributions into the business by the proprietor, partners or other shareholders toward s the capital of the firm and any sum received from debentureholders , any loans and t he proceeds of sale of any fixed assets of a business enterprise. Example : capital introduced , loan taken etc. C APITAL RECEIPTS : SUMAN ROY Deptt. Of Commerce Sonapur College Sonapur

13. • Capital receipts increases the value of fixed assets . • Capital receipts increa ses the profit earning capacity of business. • Capital receipts are non - r ecurring in nature. • Capital receipts is generally made for acquiring fixed assets . SUMAN ROY Deptt. Of Commerce Sonapur College Sonapur FEATURES OF CAPI TAL RECEIPTS : • Capital receipts generally involve large amounts of funds .

14. Revenue receipts means the amount realised by sale of goods or rend ering of services. Example : interest on investment , com mission etc. SUMAN ROY Deptt. Of Commerce Sonapur College Sonapur REVENUE RECEIPTS :

15. • Revenue receipts do not add to the value of assets . • Revenue receipts are show at the credit side ( acc ounting treatment ) of trading an d profit & loss account. • Revenue receipts is that expenses are recurring in nature . • Revenue receip ts are related to general operating expenses . • Revenue receipts are related to sho rt period . SUMAN ROY Deptt. Of Commerce Sonapur College Sonapur FEATURES OF REVENUE RE CEIPTS :

16. These receipts are recurring in nature. It is the amount recei ved ad compensation und er an agreement . Revenue receipts ate shown in the credit side of eit her Trading account or Prpfit & Loss account. The incomes are non-recurring in nature. It is the amount received for surrender of certain rights under an agreement. Capital rece ipts are shown in the liabilities side of balance sheet. CAPITAL RECEIP TS The am ount rece ived in the form o f capital introduced , loans taken and sale proceeds of the f ixed assets. Capital receipt in substitu tion of a source of inco me. REVENUE RECEIPTS The amont received mainly by selling of g oods and services. Revenue receipt s in substitution of an income. SUMAN ROY Dept . Of Commerce Sonapur Colle ge Sonapur D ISTINCTION BET WEEN CAPITAL RECEIPTS & REVENUE RECEIPT S PO INT S Meaning Nature Agreement Accounting treatment Substitution

17. THANK YOU SUMAN ROY DEPARTMENT OF COMMERCE (ACCOUNTANCY) SONAPUR COLLEGE SONAPUR PH : 97067-6767 4