Faculty in a B-School
633 Points
Joined November 2009
Any money spent for day to day running of the business can be classified as revenue expenditure. For example rent, salary and telephone bills paid are revenue expenditure. Similarly any amount spent on acquiring such assets which are going to help you create income is called capital expenditure. For example amount paid for purchase of machinery, building and furniture is capital expenditure.
Basic principle for recognising revenue is that, when the seller becomes legally entitled to receive payment for goods supplied or services rendered, he can treat that amount as his income in his books.