Revenue Expenditure Definition Economics
In the production of goods and services and its sale which facilitates revenue generation of the company.
Revenue expenditure definition economics. I the expenditure must not create an asset of the government. A revenue expenditure is a cost that will be an expense in the accounting period when the expenditure takes place. Examples of revenue expenditure are salaries of government employees interest payment on loans taken by the government pensions subsidies grants rural development education and health services etc. Generally expenditure incurred on normal running of the government departments and maintenance of services is treated as revenue expenditure.
Meaning pronunciation translations and examples. The sum of revenues from all products and services that a company produces is called total revenue tr. Enhances the value of an existing asset. Expenditure incurred for acquiring assets to enhance the capacity of an existing asset that results in increasing its lifespan.
However the amount spent on construction of metro is not revenue. For example payment of salaries or pension is revenue expenditure as it does not create any asset. Revenue expenditures are often discussed in the context of fixed assets. Revenue in economics the income that a firm receives from the sale of a good or service to its customers.
Tax revenue and expenditure for both developed and developing countries. 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. Journal of economic development vol 24 3 july 2017 pp 04 26 to investigate this relationship this study applies the. The amount of money spent by a business or organization on general operating costs such.
The expense incurred for maintaining the day to day activities of a business. Technically revenue is calculated by multiplying the price p of the good by the quantity produced and sold q in algebraic form revenue r is defined as r p q. Definition of revenue expenditure.