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Capital & Revenue Expenditure. 2. Operating & Non-Operating Items

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Manish Gupta

This document discusses capital expenditure versus revenue expenditure and operating versus non-operating items. Capital expenditure includes spending on long-term assets that provide benefits for more than one year, while revenue expenditure provides short-term benefits within a year. Operating items are related to main business operations, while non-operating items are unrelated. Cash flows from operations include receipts from sales and payments for supplies and wages. Cash flows from investing/financing include items like asset sales, borrowing, dividend payments.

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Capital & Revenue Expenditure. 2. Operating & Non-Operating Items

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Manish Gupta
18 views14 pages
This document discusses capital expenditure versus revenue expenditure and operating versus non-operating items. Capital expenditure includes spending on long-term assets that provide benefits for more than one year, while revenue expenditure provides short-term benefits within a year. Operating items are related to main business operations, while non-operating items are unrelated. Cash flows from operations include receipts from sales and payments for supplies and wages. Cash flows from investing/financing include items like asset sales, borrowing, dividend payments.

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This document discusses capital expenditure versus revenue expenditure and operating versus non-operating items. Capital expenditure includes spending on long-term assets that provide benefits for more than one year, while revenue expenditure provides short-term benefits within a year. Operating items are related to main business operations, while non-operating items are unrelated. Cash flows from operations include receipts from sales and payments for supplies and wages. Cash flows from investing/financing include items like asset sales, borrowing, dividend payments.

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18 views14 pages

Capital & Revenue Expenditure. 2. Operating & Non-Operating Items

Uploaded by

Manish Gupta
This document discusses capital expenditure versus revenue expenditure and operating versus non-operating items. Capital expenditure includes spending on long-term assets that provide benefits for more than one year, while revenue expenditure provides short-term benefits within a year. Operating items are related to main business operations, while non-operating items are unrelated. Cash flows from operations include receipts from sales and payments for supplies and wages. Cash flows from investing/financing include items like asset sales, borrowing, dividend payments.

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You are on page 1/ 14

1. CAPITAL & REVENUE EXPENDITURE.

2. OPERATING & NON-OPERATING ITEMS.

GROUP NO:7
LEADER: KANICA ARORA
MEMBERS: ANAND NEGI
SUJEET DESHWAAL
ASHISH SRIVASTAVA
MANISH GUPTA
HEMLATA YADAV
BRAJESH ARYA
1. CAPITAL EXPENDITURE

 Capital expenditure is money spent on the purchase of


permanent or fixed assets for setting up the business in the
initial stage.
 Improvement or extension of existing assets.
 It is to increase the earning capacity of the business
enterprise.
 Initial legal cost.
 Long term assets.
 It provides benefits up to more than one year.
 Value added to the assets is depreciated year by year.
Capital expenditure.
Capital expenditure

Cost of financing a
Intangible assets Tangibleassets
fixed assets
e.g : trade mark. e.g:land
e.g: loan
2.REVENUE EXPENDITURE
 When some expenditure is incurred in any financial year
for the sake of generation of revenue in the current
financial year , this is called as revenue expenditure.
 It is charged wholly to the p&l account of the concerned
financial year.
 It ‘s a money spent on materials & services i.e consumed
by the business in carrying out business activities.
 Expenses incurred for maintaining the efficiency of fixed
assets.
 example : wages of workers,electricity bill etc.
 When the benefit of a revenue expenditure is
available for a period of two or more years is
known as deferred revenue.
REVENUE EXPENDITURE

REVENUE EXPENDITURE

Day to day Upkeep of Purchase of


depreciation
expenses fixed assets stocks
COMPARISON
REVENUE EXPENDITURE CAPITAL EXPENDITURE

Smaller in size. Comparatively larger in size.

 recurring in nature.  non-recurring in nature.

Includes operating & non- Includes miscellaneous


operating expenses. expenditures.

Short term expenses. Expense is for long term.

Results in to short term income. Results in to long term income.

It’s effect gets exhausted usually Comparatively It’s effect last


in a year. longer.
some special expenditure seems to be revenue
expenditure but are treated as capital expenditure:-

 Initial expenses for the set up of company.


 Raising loans ,underwriting commission &
legal expenses.
 payment of Interest on capital(loan) before
production of company begins.
 Expenses in acquisition & installation of
assets.
OPERATING & NON-OPERATING ITEMS.

OPERATING ITEMS NON-OPERATING


ITEMS.

Operating operating non-operating Non-operating


expenses. income. expenses. income.
OPERATING ITEMS

 An expenditure incurred by the company in carrying out


the operational activities of the company in which it is
involved mainly is known as operating expense.
e.g: money spend by parle agro in manufacturing
biscuits.
 Operating income is revenue which is earned by
carrying out the main operational activities of the
company.
NON-OPERATING ITEMS.

 Expenses & losses accounted by the company through


the processes, which are not the part of the operating
activities is known as non-operating expenses.
e.g. loss in investment by agro based company.
 Non-operating income refers to the revenue that is not
generated through any of the operational activities of the
company.
e.g. rent received ,commission, benefits through long
term investments.
CASH FLOW FROM OPERATING
ACTIVITIES.

INFLOW OUTFLOW

Trade & other receivables. Purchase of inventories.

Revenue from services. Employee’s payment.

Sales of finished goods. Admin & transport cost.


CASH FLOW FROM NON-OPERATING
ACTIVITIES FROM FINANCE & INVESTMENT.

INFLOW OUTFLOW
Issuing ipo or bond. Dividends paid.
Proceeds from borrowings. Payment of debts.

INFLOW OUTFLOW
Sale of assets. Purchase of fixed assets.
Dividends received. Money lending.
IF ANY QUERIES….?????

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