What is capital and revenue expenditure?

Capital expenditure refers to the funds spent on acquiring, improving, or maintaining long-term assets such as buildings, machinery, equipment, or vehicles. These expenditures are typically made to enhance the productive capacity or efficiency of a business and are expected to provide benefits over multiple accounting periods.

Revenue expenditure, on the other hand, refers to the funds spent on day-to-day operational expenses that are necessary to keep a business running. These expenses are incurred regularly and are typically consumed within the same accounting period. Examples of revenue expenditure include salaries, rent, utilities, advertising, and repairs.

In summary, capital expenditure is related to long-term assets and provides future benefits, while revenue expenditure is associated with ongoing operational expenses.