Ca Cpt Accounting Capital And Revenue Expenditure Ideal Classes

Visit http://cakart.in or call 09980100288, 08042153472 for CA Videos, books and question banks. so today we are studying with new topic and that topic is capital and revenue it is a small topic it is a pure theory topic ..and on this 2 or 3 multiple choice questions can be asked mainly it is based on classification of income and expenses. the classification of income and expense is done on the basis of the benefit which we get by spending the amount or receiving the amount this is the first or the most important criteria of recording the amounts either in the income statement that is trading and profit and loss account or in the balance sheet if I spend any amount and I am getting benefit for more than 1 year then we will say that as capital expenditure if I spend an amount and by spending we get benefit of 1 month, 2 months, 6 months or maximum 12 months which means that if I need further benefit then I will have to spend that amount again then we will say that revenue and that will be written against the revenue statement or trading profit and loss account. until now the final accounts that we created we have trial balance and we marked trial balance that this amount will be recorded in trading account, P&L account or asset side ..but why certain amount are recorded on trading account or against asset side ..that is due to this difference ..the amounts which give long term benefit which are called capital expenditure are recorded in the balance sheet and the amounts which are recurring in nature which have short term benefits are recorded in Profit and Loss accounts ..such as we can take an example ..