August 24, 2014
The difference between revenue expenditures and capital expenditures is that revenue expenditures are expenditures that are immediately charged against revenues as an expense. For example, these charges can be things like maintenance on vehicles, replacement parts for machines, and up keep of the building. Capital expenditures are expenditures that improve the company, things like additions, or major improvements to their facility. After reading chapter nine I found out that “a company may incur cost for ordinary repairs, additions, and or improvements” (Weygandt & Kieso, P.409), this is considered expenditures during a useful life. You have the everyday repairs and you have additions and improvements to the facility. Every day repairs are expenditures that are used to “maintain the operating efficiency and productive life of the unit” (Weygandt & Kieso, P.409). Additions and improvements are made to improve the plants operating efficiency and productive capacity, or its “useful life of a plant” (pg.409). Additions and Improvements are made to increase the company’s investment and to make sure their facilities are productive. I will say that both of these expenditures are similar in one way, they both are concerned with spending money to help a business grow.
The entries of revenue expenditure would be something like maintenance, something a company would pay if needed to repair a truck they would have to pay right away to get the vehicle out of the shop. Or maybe the company would have repainted the building they would have to pay the bill right away. These repairs are recorded or entered as building repairs, or as…