Page 25 - IC26 LIFE INSURANCE FINANCE

UNIT 6: CAPITAL AND REVENUE EXPENDITURE AND RECEIPTS

1. Capital Expenditure: It contributes to the revenue earning capacity of a business over
more than one accounting period. Ex-Purchase of plant & machinery, Overhauling of second
hand machinery.

2. Revenue Expenditure: It is incurred to generate revenue for a particular accounting
period. Ex-Purchase of raw material, salary & wages, rent, depreciation, etc

3. Deferred Revenue Expenditure: It is that expenditure for which payment has been made
or a liability which is carried forward on the presumption that it will be of benefit over a
subsequent period or Ex-Advertisement expenses, preliminary expenses.

4. Revenue Receipts: Receipts which are obtained in course of normal business activities are
revenue receipts. Ex- Sale of goods & services, interest income, etc

5. Capital Receipts: Receipts which are not revenue in nature are capital receipts. Ex-Sale of

fixed assests or investments secured or unsecured loans.

Sashi Publications Pvt Ltd Call 8443808873/ 8232083010