What is a capital expenditure policy?
The purpose of this policy is to establish the responsibilities and authorization limits for the procurement of capital expenditures. A capital expenditure is considered an asset of the Company and it is, therefore, capitalized in the financial records.
What is revenue and expenditure policy?
Fiscal policy involves the decisions that a government makes regarding collection of revenue, through taxation and about spending that revenue. It is often contrasted with monetary policy, in which a central bank sets interest rates and determines the level of money supply.
What is capital or revenue expenditure?
Capital expenditure is the money spent by a firm to acquire assets or to improve the quality of existing ones. Revenue expenditure is the money spent by business entities to maintain their everyday operations. Time span. Capital expenses are incurred for the long-term.
How do you decide whether an expenditure is revenue expenditure or a capital expenditure?
An expenditure incurred to earn an income is revenue expenditure, e.g., salary of the staff, advertisement expenses, etc. (iv) Purpose of transaction. If the amount is spent on increasing the earning capacity of an asset, it is capital expenditure, e.g., expenditure incurred for fitting new windows of factory building.
What are the examples of revenue expenditure?
Other examples of revenue expenditures include the following: Salaries and employee wages. Any overhead expense, such as salaries for the corporate office, which typically fall under selling, general, and administrative expenses (SG&A) Research and development (R&D)
What is capital expenditure example?
Examples of capital expenditures are as follows: Buildings (including subsequent costs that extend the useful life of a building) Computer equipment. Furniture and fixtures (including the cost of furniture that is aggregated and treated as a single unit, such as a group of desks)
What is capital and revenue expenditure explain with examples?
The funds required for the purchase of the storage facility is considered a capital expenditure. In contrast, the painting and refurbishing costs are denoted as revenue expenditure since it does not promote the asset in generating more income.
What is revenue expenditure and capital expenditure with examples?
Why is it important to distinguish between capital and revenue expenditure?
The distinction between capital receipt and revenue receipt is important because capital receipt is taken to the Balance Sheet and revenue receipt is taken to the Trading and Profit and Loss Account. Capital receipts are the receipts which are not obtained in course of normal business activities of the enterprise.