Meaning Of Revenue Expenditure In Accounting

Revenue expenditure incurred on fixed assets include costs that are aimed at maintaining rather than enhancing the earning capacity of the assets.

Meaning of revenue expenditure in accounting. A revenue expenditure is a cost that will be an expense in the accounting period when the expenditure takes place. In other words revenue expenditures are extra expenses incurred because of an asset but they don t add any additional value to the asset or increase its. Furthermore as per the matching principle the expense should be matched with the revenue earned during the period to be regarded as revenue expenditure. If the expenses made by the firm helps in the generation of revenue for the current accounting period it is considered as an operational expense.

It must be noted here that revenue expenditure does not boost the profit generating capacity of a business. Meaning pronunciation translations and examples. The revenue expenditures take place after a fixed asset had been put into service and simply keeps the asset in working order. 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.

It is primarily two types one is related to the cost of sales and the other is related to opex. These are costs that are incurred on a regular basis and the benefit from these costs is obtained over a relatively short period of time. They are considered significant for generating revenue in a given accounting period. Revenue expenditure is the sum of the expense that the business incurs in the production of goods and services which helps for revenue generation of the company in an accounting period.

Revenue expenditures are often discussed in the context of fixed assets. What is revenue expenditure.