List six points of difference between capital and revenue expenditure.

List six points of difference between capital and revenue expenditure.

Capital expenditure increases an asset’s capacity or useful life. On the other hand, revenue expenditures help in maintaining an asset or restoring it to working condition.

Consider the features of capital and revenue expenditure and respond to the following:

List six points of difference between capital and revenue expenditure.

Why is it necessary to distinguish between capital and revenue expenditure while preparing accounts?