ACCOUNTING FOR

BUSINESS DECISIONS
SKILL-1

DONE BY: SRI RAMA ROHAN CHAKKA

BBA RETAIL MANAGEMENT AND E-COMMERCE
Topic: Explain the expenditures (Capital, revenue & deferred) and give 5 examples of each
type of expenditures.

Skills/Competencies to be acquired:

1. Identifying the expenditures

2. Classification of expenditures
3. Finding practical examples to relate

Duration: 2 hours

1. What is the purpose of this activity? (Explain in 3-4 lines)

---To differentiate and classify between various types of expenditures such as Capital,
revenue & deferred expenditures and relating them with examples.
2.Steps performed in this activity. (Explain in 5-6 lines)
---found out all the various expenditures
--- learned and understood the definitions of Capital, revenue & deferred expenditures
--- Found out the examples relating to each expenditure

3.What resources/materials/equipment/tools did you use for this activity?

---Internet, class discussion and MS word

4.What skills did you acquire?

--- Identifying the expenditures

--- Classification of expenditures
--- Finding practical examples to relate
5.Time taken to complete the activity. (in hours)  
---1 hour

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CAPITAL EXPENDITURE
Definition: Capital Expenditure is the money spent by a business on acquiring or
maintaining fixed assets such as land, buildings, and equipment.

Examples:

1. Purchase of machinery
2. Purchase of furniture & fixtures
3. Purchase of land
4. Purchase of computers
5. Purchase of manufacturing plant

REVENUE EXPENDITURE
Definition: Revenue expenditures are the expenditures incurred by any business
for its daily operations and production of goods and services.
Types of revenue expenditures:
1. Direct expenses or Cost of sales – All expenses incurred by the business directly related
to the manufacture and sale of its goods or services.
2. Indirect expenses or Operating expense – All expenses incurred by the business to
ensure the smooth running of its operations.

Examples of Direct expenses: Raw material costs, direct labour costs, direct selling
expenses.
Examples of Indirect expenses: Office rent, electricity bills, depreciation, salaries.

DEFERRED REVENUE EXPENDITURE

Definition: Deferred revenue expenditures are those expenditures which are
assumed to accrue the benefits for more than one accounting period.
Examples: Advertising expenses, start-up costs, one-time insurance premium
schemes, one time rent premium payment, one-time purchase for any software.

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