What Is Revenue Expenditure?
Everyday running costs, and how they differ from capital spending.
Home › Accounting Glossary › Revenue Expenditure
| Examples | Wages, rent, electricity, repairs and maintenance |
|---|---|
| Opposite of | Capital expenditure |
| Topic | Financial accounting · Expenses |
Revenue expenditure in plain English
These are costs whose benefit is used up within the period. There is nothing left over to carry forward, so the full amount is an expense straight away.
Worked example
A business pays 600 to repair a machine so it keeps working as before.
| Account | Debit | Credit |
|---|---|---|
| Repairs and maintenance expense | 600 | |
| Cash | 600 |
If instead the 600 had upgraded the machine so it lasted longer or produced more, it would be capital expenditure and added to the machine’s cost.
- Capitalising routine costs, which overstates profit and assets.
- Treating all repairs as revenue expenditure. Improvements are capital.
Frequently asked questions
Are repairs revenue or capital expenditure?
Repairs that keep an asset in working order are revenue expenditure. Spending that improves it or extends its life or capacity is capital expenditure.
Why does the distinction matter?
It decides whether a cost reduces profit immediately or is spread over several years, so it changes reported profit and assets.
Is depreciation revenue expenditure?
Depreciation is the yearly charge of past capital expenditure. It is an expense in the income statement but is not a new payment.
Keep learning
This page is for general learning. Accounting rules vary by country and standard.