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REVENUE EXPENDITURE

Posted on July 28, 2019 By commerceiets No Comments on REVENUE EXPENDITURE

Table of Contents

  • REVENUE EXPENDITURE
    • FEATURES OF REVENUE EXPENDITURE

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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Difference between transaction and eventTransactionsUsers of AccountingRatio analysis
Limitation of AccountingCapital ExpenditureInstalment SystemDifference between consignment and sale
Book KeepingRevenue ExpenditureReserves AccountingAbnormal loss vs normal loss in consignment
AccountancyDifference between capital and revenue expenditureProvisions Treatment of loss on consignment
Accounting as science or an artAccounting EquationSingle entry systemAccounting treatment of consignment
Book Keeping vs accountingDeferred Revenue ExpenditureDifference between statement of affairs and balance sheetJoint venture vs consignment
Book keeping vs accountancyCapital receiptIFRSDepartmental Accounting
Accounting vs accountancyRevenue receiptBalance SheetMethods of departmental accounting
Basis of AccountingDifference between capital and revenue receiptProfit and loss AccountAllocation of expenses in departmental accounting
Branches of accountingDifference between accounting concepts and conventionsTrading AccountInter-departmental transfers
Cash and mercantile system of accountingAccounting StandardsVoyage AccountDifferent types of branches
Accounting PrinciplesObjectives of AccountingAccounting for Incomplete VoyageDepartmental vs Branch accounting
Golden ru les of accountingProcess of AccountingJoint ventureMethods of branch accounting
Double entry system of book keepingScope of AccountingJoint Venture Vs PartnershipIncorporation of branch trial balance
Double entry vs Single entry systemAccounting Concepts vs Accounting conventionsMethods of recording transactions in Joint VentureGarner VS Murray Rule
History of AccountingDifference between provisions and reservesConsignment
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FINANCIAL ACCOUNTING Tags:FEATURES OF REVENUE EXPENDITURE

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  • 12 ACCOUNTANCY
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  • CORPORATE OR COMPANY LAW
  • COST ACCOUNTING
  • DIRECT TAX LAWS
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  • FINANCIAL MANAGEMENT
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  • GOODS AND SERVICE TAX
  • INDUSTRIAL AND LABOUR LAWS
  • INTERNATIONAL BUSINESS
  • KEY DIFFERENCES
  • MANAGEMENT ACCOUNTING
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  • PARTNERSHIP ACCOUNTS
  • RISK MANAGEMENT AND INSURANCE

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