Accounting

Difference among Capital, Revenue and Deferred Revenue Expenditure

Difference among Capital, Revenue and Deferred Revenue Expenditure

Difference among Capital Expenditure, Revenue Expenditure and Deferred Revenue Expenditure.

Capital Expenditure

  • Period of Benefit: Benefit is enjoyed beyond the accounting year, lasts for a long time.
  • Purpose: Relates to the acquisition of fixed assets.
  • Nature of Occurrence: Non-recurring in nature.
  • Aim: Helps to increase the earning capacity of the business.
  • Convertibility: Converted into cash.

Revenue Expenditure

  • Period of Benefit: Benefit is consumed during the current year only.
  • Purpose: Incurred for the purpose of generating revenue.
  • Nature of Occurrence: Recurring in nature
  • Aim: Helps to earn the exisiting revenue
  • Convertibility: Cannot converted into cash.

Deferred Revenue Expenditure

  • Period of Benefit: Benefit enjoyed for more than one year.
  • Purpose: Relates to the capturing or retaining the market
  • Nature of Occurrence: Non-recurring in nature.
  • Aim: Helps to increase the earning capacity of the business.
  • Convertibility: Cannot be converted into cash.