What is the difference between capital expenditure and revenue expenditure?

Revenue expenditure is monies spent on the day-to-day running of a business whereas capital expenditure is monies spent on the purchase of or addition to a non-current asset. The cost of revenue expenditure is written off against profit in the year incurred whereas capital expenditure items are purchased to generate profit for the business and not for resale. Revenue expenditure is used up within one year and appears in the income statement whereas capital expenditure items will last longer than one year and appear on the statement of financial position. Example of a revenue expenditure is repairs to machinery and example of a capital expenditure is installation cost of new machinery. 

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Answered by Christina W. Accounting tutor

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