REVENUE EXPENDITURE

The amount spent to conduct the regular business activities is known as Revenue Expenditure. The benefit of this expenditure is received fully during an accounting period. All the revenue expenditures are debited to Trading and Profit and Loss account. These expenditures do not result in increasing the earning capacity of the business but only helps in maintaining the existing earning capacity.

ACCORDING TO WILLIAM PICKLES

“’Revenue expenditure is such outlay which is necessary for the maintenance of earning capacity including the upkeep of fixed assets in a fully efficient state and the normal cost involved in setting, including the cost of goods and services of the business to which it relates.”

ACCORDING TO G WILKINSON

“Revenue Expenditure is expenditure on items of resale and for immediate use i.e. stationery, rent etc.”

The following are regarded as Revenue Expenditure:

• Wages paid to factory workers.
• Oil to lubricate machines.
• Power required to run machine or motor.
• Expenditure incurred in the ordinary conduct and administration of business, i.e. rent, , carriage on saleable goods, salaries, wages manufacturing expenses, commission, legal expenses, insurance, advertisement, free samples, postage, printing charges etc.
• Repair and maintenance expenses incurred on fixed assets.
• Cost of saleable goods.
• Depreciation of fixed assets used in the business.
• Interest on borrowed money.
• Freight, cartage, Octroi duty, transportation, insurance paid on saleable goods.
• Petrol consumed in motor vehicles.
• Service charges to motor vehicles.
• Bad debts.

FEATURES OF REVENUE EXPENDITURE

TERM: This expenditure is done for short term.

AMOUNT: The amount of expenditure is usually less.

CAPITALIZATION: The amount of expenditure is not capitalized.

SHOWN IN: This expenditure is shown in Income statement i.e. Profit and Loss Account

OUTLAY: This expenditure is recurring in nature.

BENEFIT: The benefit is incurred for within an accounting year.

MATCHING CONCEPT: This expenditure is matched with revenue receipts.

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Accounting	Non profit organisation	Depreciation	Liquidity ratios
Nature of Accounting	Receipts and Payments Account	Depreciation Accounting	Acid Test Ratio
Benefits of Accounting	Scope of accounting	Hire Purchase Accounting	Cash Ratio
Difference between cost accounting and financial accounting	Financial accounting, cost accounting and management accounting	Difference between hire purchase and instalment system	Financial ratio analysis
Difference between transaction and event	Transactions	Users of Accounting	Ratio analysis
Limitation of Accounting	Capital Expenditure	Instalment System	Difference between consignment and sale
Book Keeping	Revenue Expenditure	Reserves Accounting	Abnormal loss vs normal loss in consignment
Accountancy	Difference between capital and revenue expenditure	Provisions	Treatment of loss on consignment
Accounting as science or an art	Accounting Equation	Single entry system	Accounting treatment of consignment
Book Keeping vs accounting	Deferred Revenue Expenditure	Difference between statement of affairs and balance sheet	Joint venture vs consignment
Book keeping vs accountancy	Capital receipt	IFRS	Departmental Accounting
Accounting vs accountancy	Revenue receipt	Balance Sheet	Methods of departmental accounting
Basis of Accounting	Difference between capital and revenue receipt	Profit and loss Account	Allocation of expenses in departmental accounting
Branches of accounting	Difference between accounting concepts and conventions	Trading Account	Inter-departmental transfers
Cash and mercantile system of accounting	Accounting Standards	Voyage Account	Different types of branches
Accounting Principles	Objectives of Accounting	Accounting for Incomplete Voyage	Departmental vs Branch accounting
Golden ru les of accounting	Process of Accounting	Joint venture	Methods of branch accounting
Double entry system of book keeping	Scope of Accounting	Joint Venture Vs Partnership	Incorporation of branch trial balance
Double entry vs Single entry system	Accounting Concepts vs Accounting conventions	Methods of recording transactions in Joint Venture	Garner VS Murray Rule
History of Accounting	Difference between provisions and reserves	Consignment