What is Revenue Expenditure?
Revenue Expenditure refers to the amount spent whose benefit is either received or exhausted within the accounting period or, simply it can be said that any expense that is not a capital expenditure is a revenue expenditure. Rent, salaries, expenses for maintaining and repairing fixed assets, and so on are examples of revenue expenditures.
- Revenue Expenditure is recorded as an expenditure and is matched against revenues earned in that particular period to determine the profit or loss of that accounting period.
- It also contains the part of capital expenditure that is consumed within an accounting period, like, Depreciation on fixed assets.
Difference between Capital Expenditure and Revenue Expenditure in Accountancy
It is important to understand the difference between Capital Expenditure and Revenue Expenditure. Capital Expenditure is an expenditure that is incurred for the purpose of acquiring fixed assets or enhancing the value of the fixed assets and is shown in the Balance Sheet. However, Revenue Expenditure is an expenditure incurred for the purpose of running the daily activities and is shown on the debit side of the Trading and Profit & Loss Account.