Difference Between Capital Expenditure and Revenue Expenditure

The provided report discusses the difference between capital expenditure and revenue expenditure. Capital expenditure refers to the cost incurred by a company for acquiring or improving fixed assets, such as land, buildings, and equipment, which are intended for long-term use and increase earning capacity. On the other hand, revenue expenditure is the cost incurred on day-to-day operations, including expenses like sales and distribution costs, administrative expenses, maintenance and repair expenses. The report highlights that capital expenditure is non-recurring and generates benefits over a long period, while revenue expenditure is recurring and consumed for an accounting year.

ACCOUNTING
FUNDAMENTALS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................4
TASK 3............................................................................................................................................7
TASK 4..........................................................................................................................................12
TASK 5..........................................................................................................................................16
Difference between revenue and capital Expenditure...............................................................16
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19
What is a capital expenditure versus a revenue expenditure?.2019. [Online].
Available:<https://www.accountingcoach.com/blog/capital-expenditure-revenue-expenditure> 19

INTRODUCTION
Accounting fundamentals include the recording, classifying, summarizing, analyzing and
interpreting the results in significant manner as provided by the accounting standards. All the
transactions and the events in terms of the money are recorded in the accounting. The results
interpreted are then communicated to the internal and the external users of the organization in
the form of the financial statements. The present report is based on the preparation of the
financial statement for various firms. Furthermore, the report throws deep insights towards the
contrast between the capital and the revenue expenditures in accordance with the International
Accounting Standards.
TASK 1
Maxim statements
Journal for the year
ended
Date Particulars Debit Credit
05/04/18 Cash a/c Dr. £300.00
To capital a/c £300.00
07/04/18 Purchase a/c Dr. £200.00
To cash a/c £200.00
08/04/18 Cash a/c Dr. £250.00
To Tatiana £250.00
15/04/18 Motor van a/c Dr. £150.00
To cash a/c £150.00
20/04/18 Cash a/c Dr. £350.00
To sales a/c £350.00
28/04/18 Rent a/c Dr. £50.00
To cash a/c £50.00
29/04/18 Tatiana a/c Dr. £200.00
To cash a/c £200.00
30/04/18 Drawings a/c Dr. £60.00
1

To cash a/c £60.00
£1,560.00 £1,560.00
Ledger
(Dr.) Cash a/c (Cr.)
Date Particulars Amount Date Particulars Amount
05/04/18 To capital a/c £300.00 07/04/18
By purchase
a/c £200.00
08/04/18 To Tatiana £250.00 15/04/18
By motor van
a/c £150.00
20/04/18 To sales a/c £350.00 28/04/18 By rent a/c £50.00
29/04/18 By tatiana a/c £200.00
30/04/18
By drawings
a/c £60.00
30/04/18 By closing Bal. £240.00
£900.00 £900.00
(Dr.) Capital a/c (Cr.)
Date Particulars Amount Date Particulars Amount
05/04/18 By cash a/c £300.00
30/04/18 To closing Bal. £300.00
£300.00 £300.00
(Dr.)
Purchase a/c
Dr. (Cr.)
Date Particulars Amount Date Particulars Amount
07/04/18 To cash a/c £200.00
30/04/18 By closing bal. £200.00
£200.00 £200.00
2

(Dr.) Tatiana a/c (Cr.)
Date Particulars Amount Date Particulars Amount
29/04/18 To cash a/c £200.00 08/04/18 By cash a/c £250.00
30/04/18
To Closing
Bal. £50.00
£250.00 £250.00
(Dr.)
Motor van a/c
Dr. (Cr.)
Date Particulars Amount Date Particulars Amount
15/04/18 To cash a/c £150.00
30/04/18 By closing Bal. £150.00
£150.00 £150.00
(Dr.) Sales a/c (Cr.)
Date Particulars Amount Date Particulars Amount
20/04/18 By cash a/c £350.00
30/04/18 To closing bal. £350.00
£350.00 £350.00
(Dr.) Rent a/c (Cr.)
Date Particulars Amount Date Particulars Amount
28/04/18 To cash a/c £50.00
30/04/18 By closing Bal. £50.00
£50.00 £50.00
3

(Dr.) Drawing a/c (Cr.)
Date Particulars Date Particulars Amount
30/04/18 To cash a/c £60.00
30/04/18 By closing Bal. £60.00
£60.00 £60.00
Trial balance
Particulars Debit Credit
Cash £240.00
Capital £300.00
Purchase £200.00
Sales £350.00
Tatiana £50.00
Drawings £60.00
Rent £50.00
Motor van £150.00
£700.00 £700.00
Profit and Loss a/c
Particulars Amount Total amount
Sales £350.00
cost of goods sold 100
Gross profit £250.00
Expenses £50.00
Net Profit £200.00
Balance sheet
4

Particulars Amount Total amount
Liabilities
Capital £300.00
Add: Profit £200.00
Less:drawings £60.00
£440.00
Current liabilities
Tatiana £50.00 £50.00
Total liabilities £490.00
Assets
Fixed assets £150.00
Current assets
Cash in hand £240.00
Closing stock £100.00 £340.00
Total assets £490.00
TASK 2
Pendo financial statements
Pendo
Journal entries
Particulars Debit Credit
Cash a/c Dr. £5,000.00
To capital a/c £5,000.00
Motor van a/c Dr. £600.00
To cash a/c £600.00
Purchase a/c Dr. £1,300.00
To cash a/c £1,300.00
Cash a/c Dr. £1,000.00
To Sergei a/c £1,000.00
5

Expense a/c Dr. £200.00
To cash a/c £200.00
Cash a/c Dr. £300.00
TO Sales a/c £300.00
Cash a/c Dr. £500.00
TO Sales a/c £500.00
Storage Expense A/c Dr. £150.00
To cash a/c £150.00
Sergei a/c Dr. £350.00
To cash a/c £350.00
Drawings a/c Dr. £175.00
To cash a/c £175.00
£9,575.00 £9,575.00
Ledger a/c
Cash A/c (Cr.)
Particulars Amount Date Particulars Amount
To capital a/c £5,000.00 02/01/18 By Motor van a/c £600.00
To Sergei a/c £1,000.00 03/01/18 By purchase a/c £1,300.00
TO Sales a/c £300.00 10/01/18 By Expense a/c £200.00
TO Sales a/c £500.00 24/01/18
By storage
Expenses a/c £150.00
27/01/18 By Sergei a/c £350.00
30/01/18 By drawings a/c £175.00
30/01/18 By Closing Bal. £4,025.00
£6,800.00 £6,800.00
Capital a/c (Cr.)
Particulars Amount Date Particulars Amount
6

01/01/18 By cash a/c £5,000.00
To Closing bal. £5,000.00
£5,000.00 £5,000.00
Motor van a/c (Cr.)
Particulars Amount Date Particulars Amount
To cash a/c £600.00
30/01/18 By Closing Bal. £600.00
£600.00 £600.00
Purchase a/c (Cr.)
Particulars Amount Date Particulars Amount
To cash a/c £1,300.00
30/01/18 By closing Bal. £1,300.00
£1,300.00 £1,300.00
Sergei a/c (Cr.)
Particulars Amount Date Particulars Amount
04/01/18 By cash a/c £1,000.00
To cash a/c £350.00
To closing bal. £650.00
£1,000.00 £1,000.00
Expense a/c (Cr.)
Particulars Amount Date Particulars Amount
To cash a/c £200.00
To cash a/c £150.00
30/01/18 By Closing Bal. £350.00
7

£350.00 £350.00
Sales a/c (Cr.)
Particulars Amount Date Particulars Amount
13/01/18 By cash a/c £300.00
20/01/18 By cash a/c £500.00
To closing bal. £800.00
£800.00 £800.00
Drawings a/c (Cr.)
Particulars Amount Date Particulars Amount
To cash a/c £175.00
30/01/18 By Closing Bal. £175.00
£175.00 £175.00
Trial balance
Particulars Debit Credit
Cash £4,025.00
Capital £5,000.00
Motor van £600.00
Purchases £1,300.00
Sergei £650.00
Expense £350.00
Sales £800.00
Drawings £175.00
£6,450.00 £6,450.00
8

Profit and loss a/c
Particulars Amount Total amount
Sales £800.00
Cost of goods sold £500.00
Gross profit £300.00
Less:Expenses £350.00
Net Profit -£50.00
Balance sheet
Particulars Amount Total amount
Liabilities
capital £5,000.00
add:profits -£50.00
less:drawings £175.00
£4,775.00
Current liabilities
Sergei £650.00
Total liabilities £5,425.00
Assets
Fixed assets
Motor van £600.00
£600.00
Current assets
Cash in hand £4,025.00
Closing stock £800.00
£4,825.00
Total assets £5,425.00
9

TASK 3
Mafuta
Journal entries
Date Particulars Debit (£) Credit(£)
02/01/18 Harvey a/c Dr. 124
To Sales a/c 124
05/01/18 Wages a/c Dr. 12
To cash a/c 12
Purchase a/c Dr. 150
To Rich a/c 150
07/01/18 Cash a/c Dr. 18
To smith a/c 18
09/01/18 Max a/c Dr. 21
To cash a/c 21
11/01/18 Cash a/c Dr. 64
To Sales a/c 64
14/01/18 Wages a/c Dr. 14
To cash a/c 14
Purchase a/c Dr. 75
To cash a/c 75
15/01/18 Rich a/c Dr. 162
To cash a/c 162
20/01/18 Office desk a/c Dr. 32
To cash a/c 32
21/01/18 Wages a/c Dr. 17
To cash a/c 17
Cash a/c Dr. 110
To Sales a/c 110
23/01/18 Office expenses a/c Dr. 3
To cash a/c 3
10

Cash a/c Dr. 25
To Harvey a/c 25
28/01/18 Cash a/c Dr. 84
To Sales a/c 84
Wages a/c Dr. 15
To cash a/c 15
31/01/18 Cash a/c Dr. 30
To Sales a/c 30
956 956
Ledger a/c
(Dr.) Cash a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
01/01/18
To opening
bal. 343 05/01/18 By wages a/c 12
07/01/18 To smith 18 09/01/18 By Max a/c 21
11/01/18 To Sales a/c 64 14/01/18 By wages a/c 14
21/01/18 To Sales a/c 110 15/01/18 By rich a/c 162
23/01/18 To Harvey a/c 25 20/01/18
By office desk
a/c 32
28/01/18 To Sales a/c 84 21/01/18 By wages a/c 17
31/01/18 To Sales a/c 30 23/01/18
By office
expenses a/c 3
28/01/18 By wages a/c 15
14/01/18
By purchase
a/c 75
31/01/18 By closing bal. 323
674 674
11

(Dr.)
Office expense
a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
23/01/18 To cash a/c 3
31/01/18 By closing bal. 3
3 3
(Dr.) Sales a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
02/01/18 By Harvey a/c 124
11/01/18 By cash a/c 64
21/01/18 By cash a/c 110
28/01/18 By cash a/c 84
31/01/18 By cash a/c 30
31/01/18 To closing bal. 412
412 412
(Dr.) Harvey a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
01/01/18
To opening
bal. 39 23/01/18 By cash a/c 25
02/01/18 To Sales a/c 124
31/01/18 By closing bal. 138
163 163
(Dr.) Wages a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
05/01/18 To cash a/c 12
12

14/01/18 To cash a/c 14
21/01/18 To cash a/c 17
28/01/18 To cash a/c 15
31/01/18 By closing bal. 58
58 58
(Dr.) Purchase a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
05/01/18 To Rich a/c 150
14/01/18 To cash a/c 75
31/01/18 By closing bal. 225
225 225
(Dr.) Rich a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
15/01/18 To cash a/c 162 01/01/18
By opening
bal. 12
05/01/18
By purchase
a/c 150
162 162
(Dr.) Smith a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
01/01/18
To Opening
bal. 18 07/01/18 By cash a/c 18
18 18
13

(Dr.) Max a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
01/01/18
By opening
bal. 21
09/01/18 To cash a/c 21
21 21
(Dr.)
Furniture and
Fittings a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
01/01/18
To opening
bal. 198
31/01/18 By closing bal. 198
198 198
(Dr.) Inventory a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
01/01/18
To opening
bal. 458 31/01/18
By cost of
goods sold 84
31/01/18 By closing bal. 374
458 458
(Dr.) Moon a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
01/01/18
To opening
bal. 26
31/01/18 By closing bal. 26
26 26
14

Trial balance
Particulars Debit Credit
Cash a/c 323
Sales a/c 412
Wages a/c 58
Office expense a/c 3
Office desk a/c 32
Harvey a/c 138
Purchase a/c 225
Inventory a/c 374
Moon a/c 198
Furniture and fittings a/c 26
Capital (bal.) 965
1377 1377
Profit and loss account
Particular Amount Total
Sales 412
less:Cost of goods sold 309
Gross profit 103
Expenses
office expenses 3
Wages a/c 58
Net profit 42
Balance sheet
Particulars Amount Total amount
15

Liabilities
capital 965
add: profits 42 1007
Current liabilities
Bank overdraft 84 84
Total liabilities 1091
Fixed assets 230
Furniture and fittings 198
Office desk 32
Current assets 861
cash 323
Inventory 374
Debtors:
Harvey 138
Moon 26
Total assets 1091
TASK 4
Ricardo
Journal entries
Date Particulars Debit (£) Credit(£)
02/06/18 Claire a/c Dr. 425
To sales a/c 425
13/06/18 Purchase a/c Dr. 12000
To discount received
a/c 840
To Georgina a/c 11160
16

14/06/18 Hywel a/c Dr. 8550
Discount allowed a/c
Dr. 450
To sales a/c 9000
20/06/18 Cash a/c Dr. 6000
To sales a/c 6000
21/06/18 Purchase a/c Dr. 4500
To discount received
a/c 90
To Andrew a/c 4410
22/06/18 Sales return a/c Dr. 1000
To Claire a/c 1000
24/06/18 Mandy a/c Dr. 4850
Discount allowed a/c
Dr. 150
To sales a/c 5000
24/06/18 Cash a/c Dr. 7075
Discount allowed a/c
Dr. 425
To Claire a/c 7500
25/06/18 Cash a/c Dr. 8550
To Hywel a/c 8550
25/06/18 Georgina a/c Dr. 11160
To Ricardo a/c 11160
27/06/18 Andrew a/c Dr. 4410
To Ricardo a/c 4410
69545 69545
Ledger a/c
(Dr.) Claire a/c (Cr.)
17

Date Particulars Amount(£) Date Particulars Amount(£)
02/06/18 To sales a/c 425 22/06/18
By sales return
a/c 1000
24/06/18 By cash a/c 7075
24/06/18
By Discount
allowed a/c 425
27/06/18 To closing bal. 8075
8500 8500
(Dr.) Sales a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
02/06/18 By Claire a/c 425
14/06/18 By Hywel a/c 8550
20/06/18 By cash a/c 6000
14/06/18
By Discount
allowed a/c 450
24/06/18 By mandy's a/c 4850
24/06/18
By Discount
allowed a/c 150
27/06/18 To closing bal. 20425
20425 20425
(Dr.) Purchase a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
13/06/18
To Discount
received a/c 840
13/06/18
To Georgina
a/c 11160
21/06/18 To Discount 90
18

received a/c
21/06/18 To Andrew a/c 4410 27/06/18 By closing bal. 16500
16500 16500
(Dr.)
Discount
received a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
13/06/18
BY purchase
a/c 840
21/06/18
BY purchase
a/c 90
27/06/18 To Closing bal. 930
930 930
(Dr.) Georgina a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
13/06/18
BY purchase
a/c 11160
25/06/18 To Ricardo a/c 11160
11160 11160
(Dr.) Hywel a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
25/06/18 By cash a/c 8550
14/06/18 To sales a/c 8550
8550 8550
19