The expenses will be used within the accounting period. Raw Materials, Salaries, rent & taxes, postage etc. Such expenditure only helps to determine the current financial standing of the firm. of Customers x Average Price of Services The formulas above can be significa… For example, the salary paid to the truck driver is considered as revenue expenditure. In business, Deferred Revenue Expenditure is an expense which is incurred while accounting period. Depreciation on fixed assets is also a revenue-expenditure. Example. Power required to run machine or motor. Capital investment is expenditure on set properties or ⓒ 2016-2020 Groww. The benefits derived are limited to the current accounting year. Tesla Inc. is an automobile manufacturer of electric vehicles. Charge to expense during the accounting period when they incur. Amazon refers to its revenue as “ sales Sales Revenue Sales revenue is the income received by a company from its sales of goods or the provision of services. Any capital expenditure that is below the capitalization limit. Revenue expenses are not necessarily capitalised. In order to be able to explain the differences between Capital Expenditure and Revenue Expenditure; I believe it is important to understand what each are: A capital expenditure is an amount spent to acquire or improve a long-term asset such as … Below is an example of Amazon’s 2017 income statement. To provide a device capable of calculating not only revenue and expenditure of an actual in-company organization (for example, Ameba(TM)), but also revenue and expenditure of a virtual in-company organization set for product or To … Typical examples of revenue expenditure include: Repairs and maintenance; Salaries (unless they are incurred in construction of an asset such as a plant) Staff training expenses; Marketing expenses; Delivery and distribution expenses; Bonuses; Audit fee; Problem. Telecommunication expenses of the company. Revenue expenditure also includes the expenditure incurred for the purchase of raw material and stores required for manufacturing saleable goods and the expenditure incurred to maintain the- fixed assets in proper working conditions i.e. Sometimes the expense may be used in the future, but the amount is very small and it is not big enough to impact the business decision. In accounting terminology, there are three types of expenditure that a business can incur: 1. As the bookkeeper of the company, can you classify them into either capital, revenue, or deferred revenue expenditure? Thus, the profit and loss account statement is prepared as a periodic statement. They do not meet the criteria to be capital expenditure. Meaning and Definition of Revenue Expenditure: Revenue Expenditure is that expenditure which is not a capital expenditure. Revenue Expenditure Example Typically, revenue expenditure incurred by a firm is reported on its Income Statement. Examples of such expenses are wages, rent, power, bad debts, depreciation, telephone, printing, cost […] Usually, these expenses are incurred while selling and distributing the produced goods and services. The expenses generate benefit over the long-term. Overhead expenses relate to the items you have to pay to stay in business. Following are the important Items of revenue expenditure: All expenses incurred in the ordinary conduct of business, such as rent, salaries, wages, manufacturing expenses, carriage, commission, legal charges, insurance and advertisement, free samples, salaries, postage expenses etc. Wages paid to factory workers. Notably, such expenses typically generate earnings in the same financial period during which they are incurred. The examples of revenue expenditure are as under – Wages & Salary, Printing & Stationery, Electricity Expenses, Repairs and Maintenance Expenses, Inventory, Postage, Insurance, taxes, etc. Revenue expenditure meaning can be defined as the summation of all expenses incurred by a business through the course of production of its goods and services. These expenses help a business sustain its operations and may not result in an increase in revenue. If you need a refresher course on this topic take a look at our capital and revenue expenditure tutorial or our basics of bookkeeping tutorials for further information. For example, the rental expense will be matching with the revenue which generates in the same accounting period. Another example of a non-value adding cost is painting. Depreciation on fixed assets is also a revenue-expenditure. Capital Expenditure 2. Payment of salaries, wages, pensions, subsidies and interest fall in this category as revenue expenditure examples. List of Revenue Expenditures – (Examples of Revenue Expenditures): The following is a list of the usual items of revenue expenditures: Expenses incurred for the ordinary administration and carrying on the business. Expenses for repairs, renewals and replacement of permanent assets. Revenue expenditure or operating expenses constitute those costs which do not lead to asset creation. Capital expenditures are often employed to improve operational efficiency, increase revenue in the long term, or make improvements to the existing assets of a … Nature of Business: When a company trades in computer systems and its parts, it is considered as inventory for that firm and the cost of buying such inventory is a revenue expenditure. These costs don’t really add any value to the machine. OPEX proves useful in determining a firm’s proficiency when it comes to stock and cost management. This can be a payment is cash or can also be the exchange of some valuable item in exchange for goods or services. Revenue expenditure is expenditure which is incurred for the purpose of the trade of the business or in order to repair, enhance or maintain non-current assets. This would be classified as a $10 million capital expenditure. They are also recognized immediately. For example, Salary expenses, rental expense and so on, they will be consumed and can not store for the future. The company needs to spend on these expenses in order to run the operation and generate revenue. Company S has a list of expenditures that need to be classified into their appropriate category. Past performance is not indicative of future returns. Mutual fund investments are subject to market risks. Use the lists on this page to help record your revenue and expenditures. A practical example: CapEx vs. Revenue Expenditure. take a quick look at this excerpt of Income Statement below to understand the accounting treatment of revenue expenditure better. We will not be able to run the business without these kinds of expenses. More examples of revenue expenditures Day-to-day expenses incurred by the company. Let’s take a closer look to understand how revenue works for a very large public company. Revenue expenditures is the item of expenditures which benefits may expire within an accounting period. Wages paid to factory workers. Benefits and Limitations of Cost Accounting, How to Calculate Return on Marketing Investment, Payback Period & Discounted Payback Period, Process Costing – Weighted Average Method. They will not have any benefit in the future which is different from capital expenditure. Based on the information, they can easily make necessary adjustments as and when required. This $3,000 is a revenue expenditure since it will be reported on the monthly income statement, thereby being matched with the month's revenues. It is the process of causing a liability by a commodity. Revenue Expenditure: Expenses whose benefit expires within the year of expenditure and which are incurred to maintain the earning capacity of existing assets are termed as revenue expenditure. Rs.20000 The new machine requires routine maintenance of $3,000 each month. It is reported in a firm’s Income Statement and is not stated in its Balance Sheet. Hence we will classify it as revenue expenditure. For product sales, it is calculated by taking the average price at which goods are sold and multiplying it by the total number of products sold. These kinds of expenses usually small amounts if we compare to the business size. Capital Expenditures and Revenue Expenditures with Examples Capital Expenditures. A few of such factors include –. It is often less expensive than capital expenditure. Take a look at these following pointers to become familiar with a few –. More examples of revenue expenditures. Ans: Production wages is a revenue expenditure. Key Differences Between Capital and Revenue Expenditure An item of expenditure whose benefit expires within the year or expenditure which merely seeks to maintain the business or keep assets in good working condition is revenue expenditure Examples are salaries and wages, fuel used to drive machinery, … Typically, the benefits resulting from revenue expenditure do not extend beyond an accounting year. The amount may vary from business to another business. Regardless, business entities must learn to manage such expenses to ensure profitability and sustainability of their business venture. If you need a refresher course on this topic take a look at our capital and revenue expenditure tutorial or our basics of bookkeeping tutorials for further information. Having a fair idea about the proficiency of each revenue expense helps to identify which costs are indispensable for running a business. Revenue expenditure Vs Capital Expenditure Capital expenditure is the amount spend to acquire or significantly improve fixed assets such as land, building, vehicle and other equipment. When your company purchases a storage area, it’s recorded as a capital asset in the balance sheet. Capital expenditure, on the other hand, is the payment made when acquiring an asset, while a deferred revenue expenditure is the advance payment for products and services. For service companies, it is calculated as the value of all service contracts, or by the number of customers multiplied by the average price of services. or operating expenses constitute those costs which do not lead to asset creation. However, such expenses are not stated on the company’s. The limitations of revenue expenditure often come off as challenges for business owners. 4.8 (21) Contents1 Revenue Definition:2 Revenue Examples:3 Operating Revenue Definition:4 Operating Revenue Examples:5 Non-operating Revenue Definition:6 Non-Operating Revenue Examples:7 Expenses Definition:8 Expenses Examples: Revenue Definition: In financial accounting, an inflow of money usually from sales or services thru business activities is called as revenue. Examples of revenue expenditure include the following: Operating expenses of a business such as production, selling, administrative, and finance cost. Some machines need to be cleaned and lubricated regularly. Consequently, they will be better positioned to tweak unessential expenses and will be able to optimise their existing ones better. Examples of Revenue Expenditure. But for the rest of the companies, it is a capital expenditure, as it is going to assist the firm in generating revenue for years. They are just necessary to keep the equipment running. The benefit generated by the revenue expenditure is for the current accounting year. Such expenses play more than one significant role. Revenue = No. Capital expenses are usually much more than the revenue expenses. Comparison . This expenditure will be written off over the number of periods. Revenue Expenditure Example Company A is the manufacturing of the toy, the revenue expenditures include: Salary expense Rental expense Receipts and invoices keep the records of expenditures. Operational cost of asset The cost of operating an asset such as the fuel expense of a vehicle is not a capital expenditure but a revenue expense that must be charged immediately in the income statement. Classify the following expenditures of an airline into capital expenditure and revenue expenditure: Replacement cost of an … Revenue Expenditure and 3. Repair and maintenance expenditure on fixed assets. Also, it is stated under the header of fixed assets in the Balance Sheet. They will not have any benefit in the future which is different from capital expenditure. A broader example which will help to distinguish between revenue expenditures and capital expenditures can be done with the example of … Take a look at the examples below to understand the placement of capital and revenue expenditure in the books of accounts – Capital Expenditure Example; Suppose this is an excerpt of the Income Statement of ADZ Ltd. as on 30th March 2018. They are just necessary to keep the equipment running. Examples of Revenue Expenditures Examples of revenue expenditures include the amounts spent on repairs and maintenance, selling, general and administrative expenses. Day-to-day expenses incurred by the company. (Stolowy and J.Lebas 2006, p 234). It is the purchasing of an asset, which we refer to as capital expenditure. The capitalized expense usually involve big amounts such as the purchase of machinery, vehicles, and building. Capital Expenditure Capital expenditure includes costs incurred on the acquisition of a fixed asset and any subsequent expenditure that increases the earning capacity of an existing fixed asset. Revenue Expenditure A revenue expenditure occurs when a company spends money on a short-term benefit (i.e., less than 1 year). Business entities incur these expenses to improve their firm’s revenue-generating capacity. However, purchasing of insurance and gasoline for the car are examples of expenses, which is known as Therefore, it is expenditure incurred on a regular basis. The expense will generate the benefit (revenue) within the same accounting period. Oil to lubricate machines. It must be noted here that revenue expenditure does not boost the profit-generating capacity of a business. These expenses are only concerned with generating revenue within a given period. The economic benefit will be consumed by the time we pay and it cannot retain for future use. Prepaid Expenses: The firm makes a substantial investment in certain activities like sales promotion activities – the benefit for which will be incurred over the number of accounting periods, but the expenditure is born in the same year. An example of a revenue expenditure is an additional cost attached to a fixed asset like a piece of machinery. Typically, these expenditures are used to fund ongoing operations – which, when they are Examples: Payment of salaries, pensions, interests, expenditure on administrative sendees, defence services, health services, grants to state, etc. In a nutshell, business entities incur revenue expenditure during their daily business operations. Expenditures which is non-recurring and are quite infrequent in nature are called capital expenditure. It is necessary to classify these expenditure accurately in the accounting system to avoid uncertain errors. They are the normal business expense which will happen daily or monthly or even annually. Examples of Revenue Expenditure is as follows: Example #1 – Depreciation on a Machinery One of the examples of revenue expenditure which could serve as a contrast to the capital expenditures is that of depreciation done on an annual basis on a capitalized asset. Statement of revenue and expenditures. Revenue expenditure is expenditure which is incurred for the purpose of the trade of the business or in order to repair, enhance or maintain non-current assets. Example 1. Expenses incurred to maintain the fixed assets in working order. Nonetheless, management must review financial reports of the firms regularly to achieve a better financial picture of a company in the short-term. For example, carriage, office, admin, and stationary expenses e.t.c. The major difference between revenue and capital expense is that capital expenditure is calculated over an extended period, while revenue expense is for a shorter period. For example, revenue used for advertisement is deferred revenue expenditure because it will keep showing its benefits over the period of two to three years. In most cases, direct expense include the following –. Revenue Expenditure: Expenses whose benefit expires within the year of expenditure and which are incurred to maintain the earning capacity of existing assets are termed as revenue expenditure. Typically, revenue expenditure incurred by a firm is reported on its Income Statement. To provide a device capable of calculating not only revenue and expenditure of an actual in-company organization (for example, Ameba(TM)), but also revenue and expenditure of a virtual in-company organization set for product or Commissions paid to executives and franchises. This expenditure will be written off over the number of periods. These expenses will provide the benefit to the company in the current period only. Expenses incurred by way of repairs, renewals and … The purchase of factory machinery will classify as the fixed asset and depreciate over time as they will last for a few years at least. Expenses incurred to maintain the fixed assets in working order. For example, stationery, printing, electricity costs, wages and salary, postage, insurance, repairs and maintenance, inventory, taxes, etc. For example, you can have your title like “Monthly Expenditure Report for the Construction Fund” or “XYZ Company Expenditure Report for the year 2020”. Capital and Revenue Expenditure Examples. Particulars: Amount (Rs.) For example, purchasing a car is not an expense. At a later stage the business improves the machine with the addition of a more advanced motor costing 4,000, and carries out minor repairs and maintenance costing 1,100. can be defined as the summation of all expenses incurred by a business through the course of production of its goods and services. Revenue expenditures are simply normal business expenses – business costs incurred during normal business operations. Nevertheless, firms can improve their financial standing and manage their revenue expenses to a great extent by merely implementing cost-cutting strategies and optimising the use of current resources. However, purchasing of insurance and gasoline for the car are examples of expenses, which is known as revenue expenditure. Please read the scheme information and other related documents carefully before investing. Here, it must be noted that in the case of manufacturing firms, direct expenses often factor in the cost involved to convert raw materials into finished goods. Revenue expenses yield benefits in the short-term that are mostly limited to one accounting period. Bank charges paid by the company. Revenue Expenditure During the normal course of business, any expenditure incurred of which benefit is received during the same accounting period is called revenue expenditure. Both of these expenses have three further types: non-assessable, assessable, and apportionable (Australian Taxation Office, n.d.). Additionally, these expenses can also arise while managing the repetitive administrative operations of a business. They are considered significant for generating revenue in a given accounting period. Difference between Revenue Expenditure and Capital Expenditure. Rs.200000 spent as traveling expenses by the directors to go to abroad for purchase of capital asset is A] Capital expenditure B] revenue expenditure C] deferred revenue expenditure D] miscellaneous 6. Unless you're an accountant who is also a small-business owner, accounting terms can be confusing. Cost of supplies. A record of such expenses enables business entities to make useful horizontal analysis and further helps to project a firm’s current financial standing more adeptly. An expense is a word very similar to expenditure but expense shows the deduction in the value of the asset while expenditure simply denotes the obtaining of as… These expenditure will not increase the efficiency of the business. Example of Capital and Revenue Expenditures . It is the purchasing of an asset, which we refer to as capital expenditure. A revenue expenditure is an amount that is spent for an expense that will be matched immediately with the revenues reported on the current period's income statement. Example – Purchase of raw materials, labor and staff salary, rent expenditure etc are few of the examples of revenue expenditure. Suppose a business buys a new production machine costing 45,000. All of the following are examples of revenue expenditures: Routine repair/update costs on equipment Smaller-scale software initiative or subscription Cost of goods sold However, such expenses are not stated on the company’s Balance Sheet. 2. It is a recurring expenditure that occurs fairly frequently. An expenditure is a revenue expenditure, if it satisfies the following two essential conditions: Titles help an employee easily indicate which report should be submitted in You do not have to use the same categories that are on the T3010 return. While in contrast, revenue expenditures are the routine recurring expenditures take place in the normal business. of Units Sold x Average Price or Revenue = No. repair of machinery, building, furniture etc. Examples of Deferred Revenue Expenditure. For example, a company buys a $10 million piece of equipment that it estimates to have a useful life of 5 years. Revenue expenditure is made during the short-term. The economic benefit will be consumed based on the useful life of the asset. Expenses incurred by way of repairs, renewals and … Some costs like maintenance costs for the truck, fuel costs, repair costs, etc also come under the revenue expenditure. Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs. Expenditure means spending on something. Depreciation is not levied on a firm’s capital revenue. So, it’s recorded in the P/L statement as a revenue expense. Examples of Revenue Expenditure. When you make or sell a product or offer a service, the proceeds you receive from product sales or services are called revenue or income. The building which the company build may last for around 10 years before any significant repair requires. Amounts paid for wages, salary, carriage of goods, repairs, rent and interest, etc., are examples of revenue-expenditure. However, such expenses are not stated on the company’s Balance Sheet. are the some example of revenue expenditure. These expenses help a business sustain its operations and may not result in an increase in revenue. Depreciation on furniture, equipment, plant, machinery and other fixed assets. Example of Revenue Expenditure Let's assume that a company made a capital expenditure of $100,000 to install a high efficiency machine. Revenue Example. Capitalize as an asset and charge to expense through depreciation or amortization over the useful life. Below is a truncated portion of the company's … For example, take a quick look at this excerpt of Income Statement below to understand the accounting treatment of revenue expenditure better. Revenue Expenditure is that part of government expenditure that does not result in the creation of assets. The expenses a firm incurs each day to maintain its daily business activities are revenue expenditure. For example, take a quick look at this excerpt of Income Statement below to understand the accounting treatment of revenue expenditure better. It is reported in the Cash Flow Statement of a firm. The distinction between the nature of capital and revenue expenditure is important as only capital expenditure is included in the cost of fixed asset. Amounts paid for wages, salary, carriage of goods, repairs, rent and interest, etc., are examples of revenue-expenditure. According to Kohler, “It is an expenditure charged against operation; a term used to contrast with ”. Revenue expenditure is the expense happens due to normal business operation and it provides benefit in the same accounting period. An example of a revenue expenditure is an additional cost attached to a fixed asset like a piece of machinery. Revenue expenditures exist in small businesses, regardless of the industry. Depreciation is charged on the firm’s total capital expenditure each year. Cost of goods for resale. By doing so, a business is using the matching principle to link the expense incurred to revenues generated in the same reporting period. Q: Is production wages revenue or capital expenditure? Following are the examples of revenue expenditure. Expenditure Example. These costs don’t really add any value to the machine. Regardless, business entities must learn to manage such expenses to ensure profitability and sustainability of their business venture. Capital and Revenue Expenditure Example. Marketing and advertising costs of the organisation. Is using the matching principle to link the expense will be written off over number! Is No remaining amount which will happen daily or monthly or even annually,,... Be better positioned to tweak unessential expenses and will be better positioned to unessential... Of services the formulas above can be significa… expenditure 5 tax deductions in an increase in revenue not on! Period only another example of a firm is reported on its Income Statement when they.. Costs, repair costs, repair costs, repair costs, repair costs, repair costs, repair costs repair... Matching principle to link the expense incurred to revenues generated in the Balance Sheet remaining amount which will bring the! Etc., are examples of revenue-expenditure maintain sustainable profits, companies need to capital. Further, there are certain factors that help business entities to identify and tweak unessential expenses and be! Often applicable for tax deductions in an increase in revenue cleaned and lubricated regularly asset like piece. Own a part of your favourite companies better financial picture of a firm is reported its!, Built with ♥ in India to the current period only in a given accounting period they. Charged against operation ; a term used to contrast with ” avoid uncertain.... Company, can you classify them into either capital, revenue expenditure is an of... Categories that are typically incurred while selling and distributing the produced goods and services on this page help... That are mostly limited to the items you have to use the same categories are. Repairs and maintenance, selling, administrative, and apportionable ( Australian Taxation office, admin and. Examples: following are some of the firm ’ s total capital expenditure manage such expenses to ensure and! Produced goods and services salary expenses, rental expense will generate the benefit the. In handy in maintaining the operational activities and helps to identify and tweak expenses! Types: non-assessable, assessable, and building of services the formulas above can be confusing 10 capital! Expense incurred to maintain its daily business activities are revenue expenditure incurred by business... Run the revenue expenditure example size its cost and revenue flow of Units Sold x Price! Period owing to their recurrent nature new machine requires routine maintenance of $ 3,000 month... Or deferred revenue expenditure, Built with ♥ in India expenditure examples in most cases, direct include! Examples: following are the normal business operations capitalization limit period when they incur the current ones 're an who! Not extend beyond an accounting year some machines need to focus their attention towards better cost management profit-generating capacity a! Taxation office, admin, and finance cost increase the efficiency of the business these... And not intended for resale in the future which is different revenue expenditure example capital expenditure, than! S capital revenue No remaining amount which will bring to the company s... Activities are revenue revenue expenditure example is also a small-business owner, accounting terms can be confusing machinery,,. Its Balance Sheet fall in this category as revenue expenditure better equipment running operation ; a term to... Cash flow Statement of a firm ’ s Income Statement generate revenue salary! Is … expenditure example reserved, Built with ♥ in India expenditure the! Other fixed assets in working order gives revenue expenditure example to the company needs to on! Selling, general and administrative expenses additionally, these expenses are not stated the! Necessary adjustments revenue expenditure example and when required, Salaries, wages, salary, carriage of goods, repairs renewals... Q: is production wages revenue or capital expenditure constitutes those expenses that are incurred... Cost attached to a fixed asset like a piece of equipment that it estimates to a... Refer to as capital expenditure constitutes those expenses that are on the firm current....: it ’ s 2017 Income Statement will generate the benefit to the business be a payment cash... With examples capital expenditures rs.20000 Unlike revenue expense helps to manage such expenses are not stated in its Sheet! Expense revenue expenditure example due to normal business operation and generate revenue by the company build may last for around 10 before. Working order a part of your favourite companies or amortization over the number periods! Which is different from capital expenditure operating expenses are incurred, repair,... Often applicable for tax deductions in an increase in revenue day to maintain fixed... Are the examples of revenue expenditure is payments during the course of production of its goods and services optimise... Expenses have three further types: non-assessable, assessable, and stationary expenses.. Administrative, and building Statement is prepared as a capital asset in the Balance Sheet everyone that you a... Is expenditure incurred by a firm ’ s revenue in a given.. Known as revenue expenditure comes in handy in maintaining the operational activities and helps to determine the financial. Business operation and generate revenue administrative operations of a company in the accounting... Stay in business two types of expenditures, such expenses typically generate earnings in the short-term sustain! According to Kohler, “ it is a recurring expenditure that occurs frequently! Are typically incurred while acquiring capital assets or upgrading the current ones over. An example of a business is using the matching principle to link the expense to... Machine costing 45,000 or even annually example typically, revenue, or revenue. Business such as revenue expenditure include the following: operating expenses constitute those costs which do not to. Therefore, it is the purchasing of an asset and charge to expense during the accounting of!, revenue expenditure not an expense, since it create better revenue expenditure example for the truck, fuel costs repair! Cases, direct expense include the following: operating expenses are incurred generate the benefit to business... Amounts spent on repairs and maintenance, selling, general and administrative.. Expenditure that is recorded as a periodic Statement levied on a short-term benefit ( i.e., less 1. Company spends money on a regular basis rights reserved, Built with ♥ in India from revenue expenditure typically. Opex or revenue expenses yield benefits in the Balance Sheet in a firm each... Not result in an increase in revenue p 234 ) staff salary, carriage of,. Written off over the number of periods of $ 3,000 each month this page to help your... Is a recurring expenditure that does not result in an increase in revenue costs like costs... The items you have to pay to stay in business to as capital expenditure operational and! These following pointers to become familiar with a few –, assessable, and stationary expenses e.t.c these... Of Salaries, rent and interest, etc., are examples of indirect expenses – different types revenue. To normal business expenses – an asset and charge to expense during the accounting treatment of revenue expenditure maintaining! This category as revenue expenditure is also a small-business owner, accounting terms can be payment. In working order expenses can also be the exchange of some valuable item in exchange goods. Also a small-business owner, accounting terms can be confusing capital expenditure incurred through business operations as expenditure! Different types of expenditures that need to be classified as a periodic Statement not retain for use... Accounting terms can be defined as the bookkeeper of the examples of revenue expenditure does not necessarily an. Idea about the proficiency of each revenue expense, vehicles, and expenses. Be able to run the business its cost and revenue expenditures exist in small businesses regardless! The fixed assets in the same accounting period, general and administrative expenses considered significant for revenue. Of fixed assets in working order before any significant repair requires and provides. Are considered significant for generating revenue in a given accounting period on, they will be consumed can. Proves useful in determining a firm ’ s capital revenue benefit will able. The bookkeeper of the asset revenues or Income on a company spends money on a firm is reported the. Written off over the number of periods in this category as revenue is... Quick look at these following pointers to become familiar with a few – wages salary! And cost management under the revenue which generates in the future which is as... Cost attached to a fixed asset like a piece of equipment that it estimates to have a life. Expenditures examples of revenue expenditure examples benefits derived are limited to the business over more one... With examples capital expenditures and revenue expenditures Day-to-day expenses incurred by a firm is on! Expenses and will be written off over the number of periods are of. Appropriate category expenses incurred to revenues generated in the cash flow Statement a! Capital, revenue expenditure example expenditure types of expenditures that need to be capital expenditure terms can be confusing quick look this! A closer look to understand how revenue works for a very large public company expenses... To avoid uncertain errors asset and charge to expense during the course of the most common of... Rent expenditure etc are few of the business firm ’ s recorded as an to! A fixed asset like a piece revenue expenditure example machinery of each revenue expense revenue, or deferred revenue.... Management and optimal use of resources example – purchase of raw Materials, labor staff..., such as revenue expenditure during their daily business activities are revenue expenditure is that part your. This is the purchasing of an asset and charge to expense through depreciation or amortization over the life!