Asked by Martevus Blount on Apr 27, 2024
Verified
Define and compare capital expenditures and revenue expenditures.
Capital Expenditures
Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment, intended to improve long-term operational efficiency.
Revenue Expenditures
Costs that are charged to expense as incurred and are primarily associated with the maintenance and repair of fixed assets or for benefits within the current period.
- Understand the standards for capitalizing costs and differentiating between capital and revenue expenditures.
Verified Answer
Revenue expenditures are payments made for ordinary maintenance of an asset or unnecessary or unreasonable situations. These expenditures occur on a regular basis and are recorded as expenses. Examples would include changing tires on a truck or repainting a van.
Learning Objectives
- Understand the standards for capitalizing costs and differentiating between capital and revenue expenditures.
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