Revenue Expenditure:
Definition and Explanation:
All the
expenditures which are incurred in the day to day
conduct and administration of a business and the
effect-of which is completely exhausted within the
current accounting year are known as "revenue
expenditures". These expenditures are recurring
by nature i.e. which are incurred for meeting day
today requirements of a business and the effect of
these expenditures is always short-lived i.e. the
benefit thereof is enjoyed by the business within
the current accounting year. These expenditures are
also known as "expenses or expired costs." e.g.
Purchase of goods, salaries paid, postages, rent,
traveling expenses, stationery purchased, wages paid
on goods purchased etc.
This expenditure is
incurred on items or services which are useful to
the business but are used up in less than one year
and, therefore, only temporarily increase the
profit-making capacity of the business.
Revenue expenditure
also includes the expenditure incurred for the
purchase of raw material and stores required for
manufacturing saleable goods and the expenditure
incurred to maintain the- fixed assets in proper
working conditions i.e. repair of machinery,
building, furniture etc.
Examples:
Following are
the examples of revenue expenditure.
- Wages paid to
factory workers.
- Oil to
lubricate machines.
- Power required
to run machine or motor.
- Expenditure
incurred in the ordinary conduct and
administration of business, i.e. rent, ,
carriage on saleable goods, salaries, wages
manufacturing expenses, commission, legal
expenses, insurance, advertisement, free
samples, postage, printing charges etc.
- Repair and
maintenance expenses incurred on fixed assets.
- Cost of
saleable goods.
- Depreciation
of fixed assets used in the business.
- Interest on
borrowed money.
- Freight,
cartage, octroi duty, transportation, insurance
paid on saleable goods.
- Petrol
consumed in motor vehicles.
- Service
charges to motor vehicles.
- Bad debts.
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