Revenue expenditure

Revenue expenditure

The expenditure incurred for day to day running of the business or for maintaining the earning capacity of the business is known as revenue expenditure. It is recurring in nature. It is incurred to generate revenue for a particular accounting period. The revenue expenditure may be incurred in relation with revenue or in relation with a particular accounting period. For example, cost of purchases is a revenue expenditure related to sales revenue. Rent and salaries are related to a particular accounting period.

Features of revenue expenditure

Following are the features of revenue expenditure:

·           It is recurring in nature.

·           It is incurred for maintaining the earning capacity of the business.

·           Its benefit expires in the same accounting period.

·           It is shown on the debit side of the trading and profit and loss account.

Examples

·           Purchase of goods for resale.

·           Administrative, selling and distribution expenses.

·           Manufacturing expenses.