Revenue and capital expenditure/income

What are the two types of income?

Revenue and capital

What is capital income?

Money invested by the owners or investors that is used to set up a business or buy additional equipment

What is revenue income?

Money that comes into a business from performing its day to day function

Examples of capital income

Loans

Mortgages

Shares

Owner’s capital

Debentures

Examples of revenue income

Sales

Rent received

Commission received

Interest received

Discount received

What are two types of expenditure

Capital and revenue

What is capital expenditure ?

Money used to but capital items, which are assets that will stay in the business for a long period of time

Define non-current assets

Items owned by a business that will remain in the business for a reasonable period of time. Often referred to as ‘tangible assets’

Define intangibles

Something owned by a business that cannot be touched but adds value to the business

Examples of intangibles

Goodwill

Patents

Trademarks

Brand name

What is revenue expenditure?

Spending on items on a day-to-day regular basis

Examples of revenue expenditure

Inventory

Rent

Rates

Heating and lighting

Water

Insurance

Administration

Salaries

Wages

Marketing

Bank charges

Interest paid

Depreciation

Discount allowed