RELATIONSHIPS BETWEEN CAPITAL EXPENDITURES OPERATIONAL EXPENDITURES AND REVENUE EXPENSES

Capital expenditure is the amount a company spent to acquire or upgrade productive assets such as buildings, machinery and equipment, vehicles etc in order to increase the efficiency of a company for more than one accounting period. Companies often use debt financing or equity financing to cover the substantial costs involved in acquiring the assets mentioned above for expanding businesses.They are considered an investment in a company to boost its earnings,as a result they are recorded as an asset on a company's balance sheet.

Operational expenditures are costs that a company incurs as part of its regular course of business; they are not depreciated and must be recorded as expenses for the year in which they are incurred.
Revenue expenses are like operational expenditures in the sense that they are short-term expenses used to meet the usual needs of running a business, therefore they are listed with its liabilities.

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