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1. Thoroughly explain Capital and Revenue Expenditure Capital Expenditure i.

. Money spent by the owner: To purchase a non- current asset

Example: The owner buys a photostat machine for office use. The owner buys shelves to be used in the business. ii. To upgrade or increase the original value of a non- current asset.

Example: The owner adds safety air bags to his van. The owner repaints the ceilings of his shop. Its estimated useful life is more than one accounting period. Can be used repeatedly Affected by depreciation

Revenue Expenditure Money spent by the owner to maintain a non-current asset so that it continues to function optimumly. Example : The owner buys ink to be used in his printer. It has a shorter life and always need to be replaced. Reduces profit