What is the difference between Revenue expenditure and Capital expenditure?

 Revenue Expenditure: It is a short term expenditure incurred to meet operating expenses or daily short term business expenses to maintain profit of a company. The benefit of this expenditure is current year only or one year only. 

Capital Expenditure: It is a long term expenditure incurred on to purchase assets which increases the assets of a company. It benefited to company more than one year.

Let’s find out the difference between revenue expenditure and capital expenditure:

S.No.	Point of difference	Revenue Expenditure	Capital Expenditure
1.	What is the purpose of capital expenditure and revenue expenditure?	Revenue expenditure helps to maintain the profit capability of a company.	Capital expenditure helps to maintain the earning ability of a company.
2.	How revenue and capital expenditures are used?	Revenue expenditure is used to purchase resale goods and expenses which help to increase the profit of the company.	Capital expenditure is used for purchasing an asset to increase the assets of the company.
3.	What are the examples of revenue expenditure and capital expenditure?	Salary of employee, purchase of raw material, business travel , research and development etc.	Purchase of land & building, fixed assets, purchase patent, repair of big machinery etc.
4.	How revenue and capital expenditure related transaction recorded in book of accounts?	It is recorded in income statement	It is recorded in assets side of balance sheet
5.	How long revenue expenditure and capital expenditure give benefit to the company?	The benefit of revenue expenditure is only for one year.	The benefit of capital expenditure is more than a year.
6.	What is the nature of revenue expenditure and capital expenditure?	Revenue expenditure is short term in nature.	Capital expenditure is long term in nature.
7.	How much amount needed for revenue expenditure and capital expenditure?	Revenue expenditure requires less cash in comparison to capital expenditure. gjTture.	Capital expenditure requires more cash in comparison to revenue expenditure.
8.	Which expenditure takes long time to make a decision of how to spend the money carefully?	Decision taken to spend cash for maintaining the operating activity affects the business only for short term or an accounting year. It takes less time to make a decision in comparison to capital expenditure.	Decision taken to spend cash for acquiring or maintaining the fixed assets of a company affects the company for long period. So, the decision taken carefully before spending the cash. It takes time to make a decision.
9.	Which expenditure is follow the rules of matching concept?	Revenue expenditure work on matching concept means expenses are associated with the revenue of the same year.	Capital expenditure doesn’t work on matching concept.
10.	Which expenditure is capitalised?	Revenue expenditure dose not capitalized.	Capital expenditure is capitalized it means the value of assets purchased is depreciate and shows in asset side of balance sheet.
11.	Which expenditure is Asset or expense account among the two?	Revenue expenditure is shown in expense account.	Capital expenditure is shown in asset account.
12.	Which expenditure follow the rules of Nominal account and real account?	Revenue expenditure is a nominal account and the rule of the account is debit all expanses and losses and credit and income and gains.	Capital expenditure is a real account and the rule of the account is debit what comes in and credit what goes out.