Revenue Expenditure Business Studies Definition

Capital expenditure spending on items that can be used time and time again in the production process fixed assets revenue expenditure meets current day to day expenses e g purchase of raw materials and the payment of wages.

Revenue expenditure business studies definition. Revenue is the income earned by a business over a period of time eg one month. Revenue expenditure does not increase the efficiency of the firm. Revenue expenditure is an expenditure incurred for the basis other than the creation of physical or financial assets of the central government. Definition and explanation of revenue expenditures.

Revenue expenditure also known as operating expenses or opex refers to the expenditure incurred in the course of the day to day business activities i e. Revenue expenditure refers to those expenditures which are incurred during normal business operation by the company benefit of which will be received in the same period and the example of which includes rent expenses utility expenses salary expenses insurance expenses commission expenses manufacturing expenses legal expenses postage and printing expenses etc. In the production of goods and services and its sale which facilitates revenue generation of the company. The amount of revenue earned depends on two things the number of items sold and their selling price.

The amount of money spent by a business or organization on general operating costs such as rent insurance heating maintenance etc revenue expenditure including wages welfare and allowances rose dramatically this year. The expenditure incurred for the following purposes will be treated as revenue expenditure. An item of expenditure whose benefit expires within the year is revenue expenditure. Revenue expenditure is money that is spent on items that are only going to be used once such as printer paper stock repairs petrol etc.

These items would go under expenses in the profit and loss account and would be included as part of revenue in balance sheet.