Capital Expenditure and Revenue Expenditure

Capital Expenditure

Capital expenditures are those expenditure which normally occur at the time of acquiring fixed assets, they are non-recurring in nature and utility of which can be enjoyed by the firm or the organisation for more than on accounting year. Capital expenditure maximize the value of assets, while preparing final accounts of the organisation it is shown in Assets side of the Balance Sheet and not in Profit and Loss Account. 

Some of the example of Capital Expenditure are;

Installation Charges on machinery, Extension of Building, Addition to library books etc.

One-line Definition: Expenditure which add something in the value of fixed assets, is known as Capital Expenditure.

Revenue Expenditure

Revenue expenditures are those expenditure which normally take place to maintain the day to day operation of the firm or the organisation, they are recurring in nature and utility of which is enjoyed by the firm within accounting year. Revenue Expenditure are essential for smooth running of the organisation, it does not maximize the value of the assets of the organisation, while preparing final accounts of the organisation it is shown in Debit (Dr.) side of Profit and Loss Account and not in Balance Sheet.

Some of the Example of Revenue expenditure are;

Depreciation, Salary and wages, Fuel etc.

One-line Definition: 
Expenditure which does not add something in the value of  fixed assets, is known as Revenue Expenditure

Following example can explain better the concept of  Capital Expenditure and Revenue Expenditure;

Suppose you have car, you have added fuel of Rs. 1000/-, this is a revenue expenditure, instead if you replace its Tyre and tube, it is capital expenditure, because its utility can be enjoyed for more than one year.

Will RBI Reject Currency Notes if Written Something Accross It?

RBI Guideline to Reject Currency Notes if written a slogan or anything else.

Photo credit: http://www.rbi.org.in

Since last couple of weeks I have been seeing a continuous facebook post people saying and bothering that "RBI is going to reject all currencies/Notes from 1st January 2014 if anyone writes something across it or if it is already written." 

Much of the discussion have been made on this issue, but reality is that RBI has only warned people not to write anything on currencies and to keep it clean. A Banker cannot reject its own currency only on the ground that it is pre-written with a slogan or else. However, if you write something in front of a banker it will be rejected. 

Reality is that Bank cannot summarily reject all such currencies, what about those currencies we have, pre-written by someone else?

 In fact RBI tries to make us aware not to write any thing on a note. According to Deputy Governor K C Chakrabarty "If anyone writes anything on the currency note at the front of a banker then he may deny to accept that note so that this mistake may not be repeated again by that person."

He further stated "Our aim is to create awareness among the people that they should not write anything on the currency notes and need to keep the currency notes clean,"