,Capital and Revenue expenditure
CAPITAL EXPENDITURE REVENUE EXPENDITURE
Capital expenditure is money Revenue expenditure is money
spent on acquiring, improving and spent on running the business on
installing non-current asset day-to-day basis.
• Acquiring fixed asset
• Bringing them to the firm
• Legal costs of buying buildings
• Carriage inwards
• Any costs needed to get the
fixed asset ready to use
Capital receipt and revenue receipt
Capital Receipts Revenue Receipts
Definition Amount received which Amount received in the
do not form part of the day-to-day trading
day-to-day trading activities from revenue
activities. and other items of
income.
Features Benefits > 1 accounting Benefits is within 1
period accounting period
Effects Record as Capital or Record as revenue in
Liabilities in the Balance income statement.
Sheet
, Bad debts, allowance for doubtful debts & prov. for discounts on A/c receivables
Bad debts are debts that are considered uncollectible. They are deducted or
written off from the debtors balance and written off as an expense in the profit
& loss account.
Bad debts is an amount owing which they are unable or unwilling to pay.
Reasons for incurring bad debts:
Debtors is unable to pay
Debtors has died or has become bankrupt
Debtor cannot be traced
DR Bad debt
CR Debtor
DR P&L
CR Bad debt
Provisions for doubtful debts are estimate of amount which a business may lose
because of bad debt.
v Compare the amount of actual bad debts with the provisions made.
Reasons for providing doubtful debts:
To apply the prudence concept
To show an accurate value of debtor’s balance
To apply the matching concept
DR P&L
CR Provision for bad debt
DR Provision for bad debt
CR P&L
Recovery of bad debts is when the debtor whose account was previously written
off as bad debts turns up and settled his bad debts.
DR Cash
CR Bad Debts Recovery
DR Bad Debts Recovery Account
CR Profit And Loss Account
CAPITAL EXPENDITURE REVENUE EXPENDITURE
Capital expenditure is money Revenue expenditure is money
spent on acquiring, improving and spent on running the business on
installing non-current asset day-to-day basis.
• Acquiring fixed asset
• Bringing them to the firm
• Legal costs of buying buildings
• Carriage inwards
• Any costs needed to get the
fixed asset ready to use
Capital receipt and revenue receipt
Capital Receipts Revenue Receipts
Definition Amount received which Amount received in the
do not form part of the day-to-day trading
day-to-day trading activities from revenue
activities. and other items of
income.
Features Benefits > 1 accounting Benefits is within 1
period accounting period
Effects Record as Capital or Record as revenue in
Liabilities in the Balance income statement.
Sheet
, Bad debts, allowance for doubtful debts & prov. for discounts on A/c receivables
Bad debts are debts that are considered uncollectible. They are deducted or
written off from the debtors balance and written off as an expense in the profit
& loss account.
Bad debts is an amount owing which they are unable or unwilling to pay.
Reasons for incurring bad debts:
Debtors is unable to pay
Debtors has died or has become bankrupt
Debtor cannot be traced
DR Bad debt
CR Debtor
DR P&L
CR Bad debt
Provisions for doubtful debts are estimate of amount which a business may lose
because of bad debt.
v Compare the amount of actual bad debts with the provisions made.
Reasons for providing doubtful debts:
To apply the prudence concept
To show an accurate value of debtor’s balance
To apply the matching concept
DR P&L
CR Provision for bad debt
DR Provision for bad debt
CR P&L
Recovery of bad debts is when the debtor whose account was previously written
off as bad debts turns up and settled his bad debts.
DR Cash
CR Bad Debts Recovery
DR Bad Debts Recovery Account
CR Profit And Loss Account
