P2-In this assignment I will be explaining the difference between capital and revenue items of
expenditure and income.
In terms of capital income this is money coming in from an asset over a certain period of time, instead of
work done using the asset. For example if one buys a car company and sells and makes profit the
difference between how much they buy and sell it is capital income and capital income may be used to
buy another asset or something that will benefit a business. For example capital items could be
machinery, vehicles and tools which are then used to create products which will generate income.
Revenue income is funds that are received through the business selling their products or providing a
service to customers. Revenue is also the figure before expenses and costs are deducted to get the net
income figure. Examples of revenue income are sales and rent as these provide income for the business
for example selling a product provides income and having a building rented allows products or service to
be displayed and sold which brings in revenue and they are also not assets.
In terms of the difference between capital and revenue income in relation to capital income the owners
or shareholders of the business contributed money to buy the asset and with capital income the money
comes from asset when it is sold. However in terms of revenue income this is money coming from
customers and people who shop with the business and this money only comes when the products or
service is used.
Capital expenditure is funds spent by the business to buy or maintain fixed assets such as buildings,
furniture, land and machinery. A business does this because these assets are what keeps the business
running and generate profit. For example the price of buying machinery and maintaining it, is an capital
expenditure.
Revenue expenditure is the funds spent by a business on operating costs such as rent, heating and
insurance. Also revenue expenditure is money spent by the business on expenses that will create
benefits for them such delivery costs for their products which they will sell brings income, wages of
employee; employees provide customer service and run the stores and rent allows them to have a place
to sell their products and display it to attract customers. Revenue expenditure is also an expense that
needs to be paid in order to keep the business running.
The difference between capital expenditure and revenue expenditure is that in terms of capital
expenditure this is money that is spent to maintain or buy fixed assets as these assets are needed for
the business to fun. However revenue expenditure is money spent by the business on expenses that will
generate revenue.
In terms of the difference between capital and revenue items; for example in terms of capital income
which is coming from an asset an example of an item could be land and capital expenditure which is
money to maintain of buy the asset an item from this could be machinery and the difference between
the both is that if the land is sold more it is capital income however the machinery needs to be
maintained in order for the business to run and if the land is sold there is no business unless they have
expenditure and income.
In terms of capital income this is money coming in from an asset over a certain period of time, instead of
work done using the asset. For example if one buys a car company and sells and makes profit the
difference between how much they buy and sell it is capital income and capital income may be used to
buy another asset or something that will benefit a business. For example capital items could be
machinery, vehicles and tools which are then used to create products which will generate income.
Revenue income is funds that are received through the business selling their products or providing a
service to customers. Revenue is also the figure before expenses and costs are deducted to get the net
income figure. Examples of revenue income are sales and rent as these provide income for the business
for example selling a product provides income and having a building rented allows products or service to
be displayed and sold which brings in revenue and they are also not assets.
In terms of the difference between capital and revenue income in relation to capital income the owners
or shareholders of the business contributed money to buy the asset and with capital income the money
comes from asset when it is sold. However in terms of revenue income this is money coming from
customers and people who shop with the business and this money only comes when the products or
service is used.
Capital expenditure is funds spent by the business to buy or maintain fixed assets such as buildings,
furniture, land and machinery. A business does this because these assets are what keeps the business
running and generate profit. For example the price of buying machinery and maintaining it, is an capital
expenditure.
Revenue expenditure is the funds spent by a business on operating costs such as rent, heating and
insurance. Also revenue expenditure is money spent by the business on expenses that will create
benefits for them such delivery costs for their products which they will sell brings income, wages of
employee; employees provide customer service and run the stores and rent allows them to have a place
to sell their products and display it to attract customers. Revenue expenditure is also an expense that
needs to be paid in order to keep the business running.
The difference between capital expenditure and revenue expenditure is that in terms of capital
expenditure this is money that is spent to maintain or buy fixed assets as these assets are needed for
the business to fun. However revenue expenditure is money spent by the business on expenses that will
generate revenue.
In terms of the difference between capital and revenue items; for example in terms of capital income
which is coming from an asset an example of an item could be land and capital expenditure which is
money to maintain of buy the asset an item from this could be machinery and the difference between
the both is that if the land is sold more it is capital income however the machinery needs to be
maintained in order for the business to run and if the land is sold there is no business unless they have
