Revenue expenditure is when the expense is related to the current accounting period under consideration. In other words, utility/benefits obtained against revenue expenditure were completely utilized in the current accounting period, and there is no need to record carry forward balance in the next accounting period. These operational expenses are directly recorded in the balance sheet by debiting the expense and crediting the payable/cash.
Capital expenditure, on the other hand, is an expense utilized in more than one accounting period. In other words, this type of expense is spread over multiple accounting periods. Initially, this expense is recorded as assets and transferred to profit/loss in line with the benefits utilization (depreciation/amortization).
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Wrap up
Revenue expenditure is about expenses related to the current accounting period. The utility obtained via incurring this expense is completely utilized in the current accounting period.
Capital expenditures, on the other hand, are related to multiple accounting periods. A single expense is allocated to more than one accounting period.
Daniyal Khatri, ACCA, is a seasoned bookkeeping specialist with over a decade of experience in designing precise, compliant financial systems. His expertise spans daily transaction tracking, ledger management, and financial record accuracy, ensuring businesses maintain organized, audit-ready books. Daniyal excels at aligning processes with evolving compliance standards, integrating user-friendly tools to automate workflows, and translating regulatory complexities into actionable steps. By combining technical proficiency with a focus on clarity, he empowers organizations to achieve error-free bookkeeping, minimize risk, and build a foundation for informed financial decisions.
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