Capital Expenditure And Revenue Expenditure Definition Pdf

capital expenditure and revenue expenditure definition pdf

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Capital Expenditures vs. Revenue Expenditures: What's the Difference?

What do you mean by Capital Expenditure? The expenditure incurred by the government is broadly divided into two parts — that which results in creation or acquisition of assets, and the other that is used for operational expenses and liabilities and does not create any kind of assets. The first category is called capital expenditure, and the second is revenue expenditure. Union Budget is broadly divided into two parts — revenue account and capital account. These two are further divided into receipts and expenditure.

For example, the capital account is divided into capital receipts and capital expenditure. Similarly, the revenue account is divided into revenue receipts and revenue expenditure. The Union government defines capital expenditure as the money spent on the acquisition of assets like land, buildings, machinery, equipment, as well as investment in shares.

Capital expenditure is the part of the government spending that goes into the creation of assets like schools, colleges, hospitals, roads, bridges, dams, railway lines, airports and seaports. Capital expenditure also covers the acquisition of equipment and machinery by the government, including those for defence purposes. Capital expenditure also includes investment by the government that yields profits or dividend in future. Why is Capital Expenditure important?

High capital expenditure usually means more investment by the government towards the creation of infrastructure and other assets that are crucial for rapid economic growth. Capital expenditure means construction of roads, highways, dams, bridges, ports, airports and railway lines. India experienced low growth rates for decades as it failed to develop physical and social infrastructure, the key to achieving high economic growth.

Capital expenditure versus revenue expenditure debate In India, both the Union government and state governments have often been criticised for spending too little on creating assets. High revenue expenditure of the Union government has often been blamed for low economic growth.

Capital Expenditure in Defence Purchase of new weapons and weapon systems such as missiles, tanks, fighter jets and submarines requires extensive capital investment.

Though defence spending is counted as capital expenditure, it does not result in the creation of infrastructure that can facilitate economic growth. Like us on Facebook and follow us on Twitter. Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates. By: FE Knowledge Desk. Capital Expenditure meaning: The Union government defines capital expenditure as the money spent on the acquisition of assets like land, buildings, machinery, equipment, as well as investment in shares.

Capital Expenditure examples: Capital expenditure is the part of the government spending that goes into the creation of assets like schools, colleges, hospitals, roads, bridges, etc. Stock Market. Amid falling FD interest rates, how to diversify to stay ahead of inflation. Cyber attack: 'Reasons for startups' data breaches go beyond lack of focus on securing apps, websites'. Truecaller rolls out new personal safety app Guardians: how to download and use on Android, iPhone.

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What is CapEx and OpEx

Capital expenditure or capital expense capex or CAPEX is the money an organization or corporate entity spends to buy, maintain, or improve its fixed assets, such as buildings, vehicles, equipment, or land. Capital expenditures contrast with operating expenses opex , which are ongoing expenses that are inherent to the operation of the asset. Opex includes items like electricity or cleaning. The difference between opex and capex may not be immediately obvious for some expenses; for instance, repaving the parking lot may be thought of inherent to the operation of a shopping mall. The dividing line for items like these is that the expense is considered capex if the financial benefit of the expenditure extends beyond the current fiscal year.

An expenditure that neither creates assets nor reduces a liability is categorised as revenue expenditure. If it creates an asset or reduces a liability, it is categorised as capital expenditure. Simply put, an expenditure which neither creates assets nor reduces liability is called Revenue Expenditure, e. These are financed out of revenue receipts. Broadly, any expenditure which does not lead to any creation of assets or reduction in liability is treated as revenue expenditure. Generally, expenditure incurred on normal running of the government departments and maintenance of services is treated as revenue expenditure.

Expenditure refers to payments made or liabilities incurred in exchange for goods or services. The term expenditure usually refers to capital expenditure, which is usually a one-time cost and is incurred to receive a long-term benefit, such as the purchase of a fixed asset. A business is set to have incurred capital expenditure when the payment is made to acquire an asset, the benefit of which would be spread over several years. Businesses invest in capital expenditure CapEx to acquire new assets or to improve the performance of existing assets and is usually a one-time expenditure. The hope is that investing in new assets or new technologies would increase revenue and bring substantial benefits to the business in the long run. Revenue expenditure refers to payments made or incurred during the normal course of the business, the benefits of which are usually received within the same accounting year. Revenue expenditures are mostly recurring expenses that are incurred by the business to generate revenues for the accounting period.

Capital expenditure

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The occurence of expenditure during the course of business is very natural. Generally, expenditure is incurred to increase the efficiency of business and further returns. These are braodly classified into two categories, i.

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Difference Between Capital Expenditure and Revenue Expenditure

Capital expenditures are for fixed assets , which are expected to be productive assets for a long period of time. Revenue expenditures are for costs that are related to specific revenue transactions or operating periods, such as the cost of goods sold or repairs and maintenance expense. Thus, the differences between these two types of expenditures are as follows:.

Хейл выслушал все это, не сдвинувшись с места и не веря своим ушам. Хватка на горле Сьюзан слегка ослабла. Стратмор выключил телефон и сунул его за пояс. - Твоя очередь, Грег, - сказал .

 - С ним все будет в порядке. Дэвид Беккер смотрел на экран прямо перед. У него кружилась голова, и он едва отдавал себе отчет в происходящем. На экране он видел комнату, в которой царил хаос.

Наверху лениво раскачивалась курильница, описывая широкую дугу. Прекрасное место для смерти, - подумал Халохот.

Он ослабил узел галстука и рухнул на стул у ближайшего свободного столика. Казалось, что с той минуты, когда рано утром ему позвонил Стратмор, прошла целая вечность. Сдвинув в сторону пустые пивные бутылки, Беккер устало опустил голову на руки. Мне нужно передохнуть хотя бы несколько минут, - подумал .

Блестящий криптограф - и давнишнее разочарование Хейла. Он часто представлял, как занимается с ней сексом: прижимает ее к овальной поверхности ТРАНСТЕКСТА и берет прямо там, на теплом кафеле черного пола. Но Сьюзан не желала иметь с ним никакого дела.

 Это зашифрованный вирус, болван; ваше счастье, что вам не удалось его вскрыть.

Там, где только что было его плечо, оказалась черная пустота. Она шагнула вперед, но и там была та же пустота. Сигналы продолжались. Источник их находился где-то совсем близко.

 Это не так важно, - горделиво заявил Клушар.  - Мою колонку перепечатывают в Соединенных Штатах, у меня отличный английский. - Мне говорили, - улыбнулся Беккер. Он присел на край койки.  - Теперь, мистер Клушар, позвольте спросить, почему такой человек, как вы, оказался в таком месте.

Capital and revenue expenditures

 Капля Росы. Вы уверены. Но Пьер Клушар провалился в глубокое забытье. ГЛАВА 23 Сьюзан, сидя в одиночестве в уютном помещении Третьего узла, пила травяной чай с лимоном и ждала результатов запуска Следопыта.

 - В чем же чрезвычайность ситуации, из-за которой вы вытащили меня из ванной. Какое-то время Стратмор задумчиво нажимал на клавиши мышки, вмонтированной в столешницу письменного стола. После долгой паузы он наконец посмотрел ей в глаза и долго не отводил взгляда. - Назови мне самое большое время, которое ТРАНСТЕКСТ затрачивал на взламывание кода. Что за чепуха.