CAPITAL AND REVENUE EXPENDITURE/INCOME — Commercial Studies STD 10 — Question
ICSE BoardEnglish MediumSTD 10Commercial StudiesCAPITAL AND REVENUE EXPENDITURE/INCOME2 Marks
Question
Why is it necessary to differentiate between capital and revenue items in accounting?
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Answer
It is necessary to distinguish between revenue and capital items so as to: (i) Identify their nature: recurring revenue expenditure, non-recurring capital expenditure. (ii) Find out where will these entries be posted and treated: trading or profit and loss account-revenue receipt, Balance sheet capital receipt.
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