CLASSIFICATION OF EXPENDITURE

Expenditure in business can be classified in 3 categories:

• Capital expenditure:The expenses which are incurred in acquiring and increasing the value of fixed assets are known as capital expenditure.The amount spent on the purchase of land and building,plant and machinery,vehicles,furniture e.t.c.is capital expenditure.
  
• Revenue expenditure:The expenses which are incurred as routine business expense are known as revenue expenditure. They are concerned with day-to-day transactions.
• Deferred revenue expenditure:The expenditures which are incurred likely to give benefit for more than one accounting period are known as deferred revenue expenditure which are of capital nature.