![\"\"](\"https:\/\/www.thetrainingplace.org\/blog\/wp-content\/uploads\/2025\/09\/Blog-3.png\")
<\/figure>\n","protected":false},"excerpt":{"rendered":"Capital expenditure occurs when a business spends money in purchasing non-current assets for the business operations or when it spends money in adding value or improving an existing non-current asset. This will include delivery and legal costs in acquiring the non-current assets.<\/p>\n\n\n\n
Non-current assets are items owned by the business which have some longevity and
will be used for a long period of time within the business. These are commonly known as fixed assets. Examples of these include buildings, machinery, furniture, motor vehicles etc.<\/p>\n\n\n\n
When a business buys a new machine, this is classified as a capital expenditure and
is accounted for in the statement of financial position over a few years, because of
the longevity of the use of the machinery in the business.<\/p>\n\n\n\n
Revenue expenditure are all other expenditure outside capital expenditure incurred
by a business in carrying out its daily operations. Such expenditure will include costs
incurred in the acquisition of current assets acquired for conversion into cash; costs
incurred in purchasing and selling of goods; day-to-day administration or operating
costs; and costs incurred in maintaining the revenue-earning capacity of the non-current assets.<\/p>\n\n\n\n
All such expenditure is charged to the statement of profit or loss, because such
expenditure are usually used up within a short period of time and don\u2019t add value to
any existing non-current assets.<\/p>\n\n\n\n