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Accounting For Business Decisions: Skill-1
Accounting For Business Decisions: Skill-1
BUSINESS DECISIONS
SKILL-1
Skills/Competencies to be acquired:
Duration: 2 hours
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CAPITAL EXPENDITURE
Definition: Capital Expenditure is the money spent by a business on acquiring or
maintaining fixed assets such as land, buildings, and equipment.
Examples:
1. Purchase of machinery
2. Purchase of furniture & fixtures
3. Purchase of land
4. Purchase of computers
5. Purchase of manufacturing plant
REVENUE EXPENDITURE
Definition: Revenue expenditures are the expenditures incurred by any business
for its daily operations and production of goods and services.
Types of revenue expenditures:
1. Direct expenses or Cost of sales – All expenses incurred by the business directly related
to the manufacture and sale of its goods or services.
2. Indirect expenses or Operating expense – All expenses incurred by the business to
ensure the smooth running of its operations.
Examples of Direct expenses: Raw material costs, direct labour costs, direct selling
expenses.
Examples of Indirect expenses: Office rent, electricity bills, depreciation, salaries.
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