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Benefit of this expenditure we [business] enjoy for a long time. Capital expenditure is incurred for
the purpose of enjoying long term advantage for the business.
This expenditure is mostly incurred for buying assets [tangible or intangible] which
can later to be sold and converted into cash.
This expenditure is incurred to increase the earning capacity of the business.

Some examples of capital expenditure:
Expenditure which are only for acquisition of fixed Assets
Expenditure which are used for the extension or improvement in fixed Assets
Legal charges incurred
purchase of land, building,
Purchase of furniture,
Or any fixed asset for permanent use in the business.

Revenue expenditure : Mostly benefit of this expenditure we [business] enjoy only within the
current year. Expenses of administration, manufacturing, selling expense, Office expense and all
day to day expenses of the current year, are example of revenue expenditure.

According to Kohlar, it is “an expenditure charged against operation: a term used to contrast
with capital expenditure.”

Accounting Principles & Conventions

Accounting Principles

Principles of Accounting are the general law or rule adopted or proposed as a guide to action, a
settled ground or basis of conduct or practice. Accounting principles are man-made. Unlike the
principles of physics, chemistry, and the other natural sciences, accounting principles were not
deducted from basic axioms, nor is their validity verifiable by observation and experiment.
Instead, they have evolved. This evolutionary process is going on constantly; accounting principles
are not “eternal truths”.

Business Entity Concept

This concept considers a business unit as a separate entity. Business and businessman are two
separate entities and all the business transactions are recorded in the books of accounts from
business point of view.

Dual Aspect Concept

This Concept also known as equivalence concept signifies that every business transaction has two
fold effects or every transaction affects at least two accounts. This concept is, in fact, the base on