The Difference Between Capital Expenditure And Cost Expenditure

2011/1/29 10:03:00 43

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Capital expenditure is the symmetry of income expenditure or cost expenditure.

It refers to the occurrence of enterprise units and their benefits to two or more than two enterprises.

accounting

Expenditures for the year include expenditure on fixed assets, intangible assets and deferred assets.

For example, the expenditure for the purchase of pport equipment should be credited to the "fixed assets" subject because the pport equipment can be used for several years.

Expenditure on pport equipment, according to its

loss

The degree of depreciation is divided into years through depreciation.

cost

And cost.

This accounting method is called depreciation or amortization.

The way to record expenditures as assets is called capitalization.

Capital expenditure is different from cost expenditure. The former is shared by the operating income of each beneficiary year, and the latter is compensated by the current operating income.

Distinguish between capital expenditure and cost expenditure is to correctly reflect the value of assets and correctly calculate the profits and losses of each year.

If the capital expenditure is used as a revenue expenditure, the result is that the asset value is reduced, the annual cost is calculated, and the profit is reduced.

In practical work, in order to simplify accounting treatment, sometimes capital expenditure less than a certain amount is also treated as a cost expenditure.