Revenue Income And Revenue Expenditure

When the benefit of expenditure is not likely to be available for more than one year it is treated as revenue expenditure.

Revenue income and revenue expenditure. 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. Revenue expenditure must not create an asset for the government. What is a revenue expenditure. Government revenues rose by 6 2 to 89 1 billion in 2019 while government expenditure grew by 5 0 to 87 6 billion table 1 figure 3 figure 4.

It must be noted here that revenue expenditure does not boost the profit generating capacity of a business. It denotes short term cost related assets that are not capitalised. Revenue expenditures are often discussed in the context of fixed assets. Iv purpose of transaction.

A revenue expenditure is a cost that will be an expense in the accounting period when the expenditure takes place. To put it simply these are the maintenance expenditure which the government makes towards the assets which it owns in order to keep them functioning. Moreover only revenue receipts and revenue expenditures are included in this account and no entries are made for capital receipts and capital expenditures. An expenditure incurred to earn an income is revenue expenditure e g salary of the staff advertisement expenses etc.

These expenditures are recurring in nature and are incurred by the government regularly. It is a cost that will be expensed in the accounting period that the purchase was made. If the amount is spent on increasing the earning capacity of an asset it is capital expenditure e g expenditure incurred for fitting new windows of factory building. An increase in taxes of 4 1 billion 6 7 was the main driver behind the rise in government revenues.

It does not increase the capacity of the business. They are considered significant for generating revenue in a given accounting period. Revenue expenses are incurred when a company purchases products or services necessary for generating revenue in the short term. Revenue is the total amount of income generated by the sale of goods or services while income is earnings or profit revenue minus expenses.

The amount spent to acquire a fixed asset is referred to as a capital expenditure. What is revenue expenditure. Usually the benefit is consumed in the period in which it is incurred except in the case of deferred revenue expense. It is incurred to run the business.

If your revenue expenditure was made in june you ll expense it in june s report.