Financial Statements - 1 — Account STD 11 Commerce — Question

Revenue Expenditure: Any expenditure, the benefit of which is received during the current year itself is termed as revenue expenditure. As such, all the revenue expenditures are debited to Trading and Profit & Loss Account. Such expenditure does not result in an increase in the earning capacity of the business but only helps in maintaining the existing earning capacity. Examples are:

1. Expenses incurred for the purpose of day to day running of business such as manufacturing expenses, office expenses, selling expenses etc.
2. Expenses incurred on the ordinary repairs and maintenance of fixed assets, white-washing of building etc.
3. Payment for goods purchased for resale.
4. Depreciation on fixed assets.
5. Purchase of raw materials for converting it into finished goods.
6. Interest on loan and interest on capital for the period after the asset is put to use.
7. Replacement of worn-out part of an existing machine.
8. Loss from sale of fixed assets.