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Questions
What is meant by Revenue Expenditure?
What is meant by the term 'Revenue Expenditure'?
Solution
- Revenue expenditure refers to regular expenses incurred for commercial operations, such as stock purchases, carriage, and freight.
- Accrual accounting assumes that revenue is recognised when earned and expenses are recognised when incurred. Revenue expenditures are charged to the Income Statement as they occur. This aligns with the Matching Principle, which states that expenses should be reported in the same month they occur.
- The advantage from revenue expenditures is for the current fiscal year. Examples of revenue expenditures include wages and salaries, printing and stationery, electricity and repair expenses, inventory, postage, insurance, and taxes.
Notes
Students should refer to the answer according to their questions.
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