...Revenue and capital expenditure are aspects of business management that seem very similar at first. Both revenue and capital expenditure are purely focused on the process of spending money to help a business survive and grow. The key difference between the two is the intention of the expenses and the direction of the money flow. Revenue is for short-term costs that are not used afterwards to make the company grow, such as repairs which are most common. Capital expenditure is for assets that are considered or categorized long-term, such as new vehicles or software, which will be used to make the company stronger. Revenue expenditure is money being spent immediately and exclusively for short-term purposes. These are expenses associated with profit-producing assets, such as repair, that may or may not increase the life of the given asset. Revenue expenditure is more often associated with day-to-day costs the company accrues through its life cycle. Capital expenditure is money is being spent on assets that will increase the company’s ability to pull in profit or operate at a higher performance level. New software technology, vehicles, machinery and tools that will be used for at least 12 months are considered capital expenditure. Capital expenditure, unlike revenue, is looked at more as an investment than a cost, because it is being used to strengthen the company so it can do better business. When purchasing a capital asset, a business either will spread the cost out over the asset’s...
Words: 456 - Pages: 2
...Expenditures and Revenues Summary: Palm Beach Sheriff’s Office Bianca Gerena AJS 522 Paula May May 26, 2014 Expenditures and Revenues Summary: Palm Beach Sheriff’s Office The Palm Beach Sheriff’s Office, a statutory government agency, is responsible for providing services to three mandated programs in Palm Beach County, Florida (PBSO.org, 2013). Those programs are Law Enforcement, Corrections Services throughout Palm Beach County’s jails, and finally Bailiff and Court staff. Palm Beach Sheriff’s office is required to respond to law enforcement calls throughout the county and all unincorporated areas of Palm Beach County. Palm Beach Sheriff’s office is also responsible for providing services to certain municipalities throughout Palm Beach County, if a contract exists between the municipality and the Sheriff’s office. The municipality must come to a fee agreement with the Palm Beach Sheriff’s office before a contract is established. The following will elaborate on the Palm Beach Sheriff’s Office revenue and expenditures and the impact of the expenditures on the revenue source. The following will also elaborate on who the key players are in terms of making budget decisions and whether or not there is any influence of political and public policies on the Palm Beach Sheriff’s Office. Finally, recommended organizational financial analysis alternatives for the Palm Beach Sheriff’s Office will be researched. The Impact of the Expenditures on the Revenue Source Palm Beach County...
Words: 1743 - Pages: 7
...Government Expenditure and Revenue by Ooi Soon Beng After studying this chapter, you should be able to understand: Public Budget Budget Deficits and Surplus Expansionary and Contractionary Fiscal Policy Discretionary and Automatic Fiscal Policy National Debts and Its Issues and Misconceptions Problems with Fiscal Policy : Macroeconomics According to Keynes, government has to intervene to stabilize the economy. Stabilization can be achieved in part by manipulating the Public Budget to increase output and employment or to reduce inflation. The Budget outlines the government’s taxation and expenditure plans for the coming fiscal year. The Ministry of Finance are responsible for the preparation of the budget. Sources of Revenues: Direct taxes on individuals and companies Indirect taxes on goods and services (gasoline, alcohol, tobacco, etc) Non-tax revenue (stamp duty, licenses, permits, etc) Malaysia: Sources of Revenue (in RM) 1990 2013 2014 Direct Taxes 35.2% 56.5% 59.1% Indirect Taxes 36.7% 16.6% 17.2% Non-Tax Revenue 28.0% 26.9% 23.7% Total Revenue 29,521m 207,913m 224,094m Source: Ministry of Finance Categories of Expenses: Operating Expenditure (emolument, pensions, debt servicing, grant to states, subsidies, supplies, scholarships, etc) Development Expenditure (security, social services, economic services, expenditure on goods...
Words: 2314 - Pages: 10
...Capital and Revenue Expenditures 1 Capital and Revenue Expenditures Clarissa Jude April 24, 2015 University of Phoenix Capital and Revenue Expenditures 2 “A capital expenditure is an amount spent to acquire or improve a long-term asset such as equipment or buildings. Usually the cost is recorded in an account classified as Property, Plant and Equipment. The cost (except for the cost of land) will then be charged to depreciation expense over the useful life of the asset. A revenue expenditure is an amount that is expensed immediately—thereby being matched with revenues of the current accounting period. Routine repairs are revenue expenditures because they are charged directly to an account such as Repairs and Maintenance Expense. Even significant repairs that do not extend the life of the asset or do not improve the asset (the repairs merely return the asset back to its previous condition) are revenue expenditures.” (Wizell, John, Accounting Made Easy. 2010). This in summary means that every cost to purchase, keep up and maintain said purchase will be reported in the financial documents. The difference between capital and revenue expenditures are: Capital Expenditures | Revenue Expenditures | 1 | Its effect is long term i.e., it is not exhausted within the current account year. Its benefit is enjoyed in future year or years also. In a word, its effect is reduces gradually. | 1 | Its effect is temporary, i.e., it is exhausted...
Words: 504 - Pages: 3
...daily incur revenue expenditures to upkeep their operating efficiency and productive life of an asset. Expenditures are unavoidable as well as they are very necessary to expand the business. Expenditures are payments of cash or cash equivalent for goods or services. The difference between revenue and capital expenditures is that revenue expenditures are expenses that are immediately charged against revenue as expenses. Regular and periodic repairs are revenue expenditures because they are charged directly to specific accounts. Examples of these accounts would be Repairs and Maintenance Expense. Capital expenditures are expenditures will increase the company’s investment primarily in productive facility. A capital expenditure is an amount spent to attain or improve a long term asset such as buildings or equipment. When recording capital expenditure, it is usually recorded in accounts classified or titled as Property, Plant and Equipment. Generally, because capital expenditures provide income for the company over a period of years, companies are not allowed to deduct the full cost of the asset in the year the expense is incurred. Revenue expenses typically are shorter term expenses because they always required to meet the ongoing operational costs of running a business. (Investopedia, 2015) The contrasting factor of capital and revenue expenditures is that revenue expenditures can be fully tax deducted in the same year the expense occurred. Revenue expenditures can be considered...
Words: 447 - Pages: 2
...Capital Expenditures & Revenue Expenditures Veronica rowe XACC/291 Jan 29, 2014 Shontell Chrisman Capital Expenditures & Revenue Expenditures Capital expenditures; a sum spent to procure or development of a long term asset, such as buildings or equipment. Under normal accounting methods the cost is put under equipment, plant, property. Everything except the cost of land can be charged as depreciation expenditure over the useful life of the asset. Capital expenditures are put on financial report as an asset on balance sheet. Capital expenditure rewards are spread over several accounting periods. Capital expenditures can include replacement cost to delivery cost, legal charges and everything in between. Revenue expenditures; are amounts distributed out instantaneously, they match entries of the existing accounting period. Scheduled maintenance is a revenue expense, because they are charged without waiting to an account like maintenance and repairs expenditures. Major repairs do not affect the life of the asset. Revenue expenditures are put on financial report on the income statement. Revenue expenditures may include maintenance charge, repair, and renewal and everything in between. Both are classified as assets. The difference between the source of Capital and Revenue expenditures is special, because Capital is comprised of cost related to fixed assets, and Revenue expenditures affect is temporary, they come often and contains no physical presence, and does not...
Words: 323 - Pages: 2
...Research and Development (R&D) 1. Specific areas in which R&D was carried out: § Design, development and type tests on 12kV panels for withstanding 25kA, 1s internal arc fault, 12kV, 4000A, 40kA Panel & VCB and bushing for R.M.U. to withstand 20kA, 0.1s internal arc fault. § Design, development and type tests of cost effective 36kV OVCB and compact substation. § Development of 420kV, 63kA DBR & ES successfully. § DTC projects for 420kV/245kV/145kV for DBR, HCB & 420/245kV PG. § Cost effective circuit breakers of 400 kV & 400 kV 63 kA range were designed developed and tested. § New product development – Prototype development of 1.73 MW motor. § Frame size 500 developed for launch in this Financial Year 2010-11. § Motors for IE2 and IE3 efficiency class developed and is under testing in Germany, FS 71 to FS 355. § Launch of CACA design in medium voltage. § Design of switched mode power supplies for industrial and railway applications. § Design of battery chargers / earth leakage relay for railway applications. § Development of dry type multi-secondary transformer of 3500kVA for MV drives. § Development of Drive Control Cabinet for 10 Cubic meter Electric Mining Shovels. § Development of LV Drives Sinamics V50 55kW to 500kW. § Development of Traction / Electrical cabinets for 4500HP Diesel Locomotive Control. § Localization of MV Drives Perfect Harmony 500kVA to 3500kVA. § Localization of counting Head for...
Words: 514 - Pages: 3
...did not allow them to focus other important priorities in the company. 2. Scalability: Bharti was facing scalability issues both in its IT function and network function. 3. Human resources scarcity: Given the rapid growth in the industry, Bharti was finding it more and more difficult to hire and retain people. It was facing intense competition from other telecom providers as well are other multi-national companies to hire engineers. 4. Lean and predictable cost model: With the rapid changes in technology and also in the requirements for network capacity, Bharti was having a very unpredictable cost model. Instead of huge capital assets on the balance sheet and capital expenditures, Bharti wanted operating expenses which went hand-in-hand with the pace of its growth. 5. Capital Expenditures: With industry consolidation, the focus was switching from having a national footprint to having the ability to provide value-added service. Operators needed 2.5G and 3G technologies to provide those services, and the transition upward from 2G required major capital investment and Bharti did not have strong capital position at that time. Describe Bharti’s value chain integration strategy (refer to telecom value chain with detailed network...
Words: 1115 - Pages: 5
...increased sales unless they receive a $0.20 per pizza reduction in price. With this deduction, they will be able to guarantee 50% of the original increased sales. Should you reduce the price? Explain. In late May, 1995, Danielle Knowles, vice-president of operations for Laurentian Bakeries Inc., was preparing a capital expenditure proposal to expand the company’s frozen pizza plant in Winnipeg Manitoba. If the opportunity to expand into the U.S. frozen pizza market was taken, the company would need extra capacity. A detailed analysis, including a net present value calculation, was required by the company’s Capital Allocation Policy for all capital expenditures in order to ensure that projects were both profitable and consistent with corporate strategies. COMPANY BACKGROUHD Established in 1984, Laurentian Bakeries Inc. (Laurentian) manufactured a variety of frozen baked food products at plants in Winnipeg (pizzas), Toronto (cakes) and Montreal (pies). While each plant operated as a profit center, they shared a common sales force located at the company’ head office in Montreal. Although the Toronto plant was responsible for over 40% of corporate revenues in fiscal 1994, and the other plants was accounted for about 30% each, all three divisions contributed equally to profits. The company enjoyed strong competitive positions in all three markets and it was the low cost producer in the pizza market. Income Statements and Balance Sheets for the 1993 to 1995 fiscal years are in...
Words: 3162 - Pages: 13
...ALL-AMERICAN PIPELINE CASE WRITE-UP EXECUTIVE SUMMARY The business nature of the project—pipelines—affected many of our assumptions and approaches to our calculations for our ultimate decision. The case provided two sets of cost estimates from an outside consultant and from Goodyear after hiring a general contractor. We utilized both sets of costs that directed us to the same decision that Goodyear should not go ahead with the Pipeline Project. Once we obtained the UFCF, the terminal value was calculated in three different ways, treating the pipeline as an asset on our books, finding the value of project if cash flows are received for perpetuity an finding the annuity value of cash flows for 30 years by assuming that after 1992 cash flows go on for 30 years. We did this to show a sensitivity analysis, but from our results we observed that values calculated from all the three methods were almost the same. We calculated the WACC using the return on assets derived by unlevering the equity beta of Celeron, which was comparable to the project at hand since Celeron was in the business of operating natural gas pipelines and processing facilities. To ensure a thorough discussion, we did a sensitivity analysis by calculating the WACC using a range of different capital structures namely Goodyear’s and Celeron’s current debt to market value of equity, debt to book value of equity, and 100% equity structure. However, our analysis showed that the capital structure did not have a significant...
Words: 2417 - Pages: 10
...receiving payment. Another reason why accounting is important for Sainsbury’s because it provides managers important information for decision making. Also it is important for accounting in Sainsbury’s because Sainsbury’s need to provide up to date information to the stakeholders about financial information. P2: Difference between Revenue Income, Revenue Expenditure, Capital Income and Capital Expenditure. Capital income: Capital income is when money is invested by other investors or by the owner to buy equipment and start up a business. The equipment brought will stay in a business long and medium periods of time for example equipment, premises and vehicles and they are called fixed assets. When you buy opining stock the money will come out of the capital income and after a month or so your stock will be paid by revenue income. Capital expenditure: Capital expenditure is the amount of money spent to upgrade or acquire assets for example vehicles, building, equipment and machinery. So by acquiring these assets you can increase the company’s efficiency or capacity for more than one accounting period. Revenue income: Revenue income is when the money comes into a business from day to...
Words: 409 - Pages: 2
...| 2013 | | | Target case write-up | FNCE601 CASE WRITE-UP 02 | Capital Expenditure Committee (CEC) plays a critical role in determining the projects that best fit Target’s future store growth and capital-expenditure plans. However, if the projects larger than $50 million it’s the board of directors’ responsibility to approve the project. On the one hand, the process rigorously follows Target’s strategic goal. The committee not only considers a positive NPV but also the potential of the project, the scale of the project and the effect of the project for the future. In this regard, we believe the process is considerate and well-balanced. On the other hand, when deciding to open a new store, the CEC heavily rely on P04 as a prototype, which may have missed some information with regard to location, and geographic distribution. A real-estate manager is responsible for the proposal from the beginning to the end of setting up a new store. His or her insightful knowledge and capability play an important role in choosing, reviewing and presenting the projects before getting approved or rejected by the CEC. However, real-estate managers’ emotional involvement in the proposal may make them not as objective as possible with their projects. In this regard, we would suggest Target to hire more than one real-estate manager to balance their work. Conventionally, a high, positive NPV and a high IRR are important determinants to choose a project. In terms of 5 CPRs in Target...
Words: 561 - Pages: 3
...Reflection Expenditures are unavoidable for any company to exist in the competitive market, to expand the business or to find new opportunities to open up beneficial business in those areas, etc. Expenditure is defined as payments of cash or cash equivalent for goods or services, or a charge against available funds in settlement of an obligation as evidenced by a source document like invoice, voucher, receipt, etc. All payments made by a company can be broadly categorized into capital expenditure and revenue expenditure. Capitol expenditure is an amount spent to acquire or enhance a productive asset to increase the capacity or efficiency of a company for more than an accounting period is defined as capital expenditure. That is, simply, capital expenditure is the expenditure made with the intension of getting the benefit from that expenditure for more than one year (usually accounting period is one year). For example, amount spent on long-term assets like machinery, plants, buildings, etc, either to improve or to acquire, is capital expenditure. Normally capital expenditure is capitalized in the books of accounts and then that amount will be depreciated over the useful life of the assets. It is also known as capital spending. It is essential to understand the differences between capital expenditure and revenue expenditure as the accounting treatments are different. Revenue expenditure is cash or resources spent on sales revenue generation or for maintaining...
Words: 442 - Pages: 2
...management of a business. Recording transactions involves the recording of finical transactions, weather the recording is a prediction or actual records this will help the owner or manager of the organisation see what money is coming in and out of the business and will help them plan for future, it also helps allows the business owner to see if the business is a success or failing if failing the owner can make changes to make the business more success and earn more money. Recording transactions also helps the business if they are paying bills or owed money they can recognise bills or payments to them haven’t been paid and they can chase them up. If payments are not paid the business can get into trouble with the HMRC (Human Management Revenue and Customs) Monitoring accounting within an organisation will be updated on a regular basis, doing this will provide a clear indication of how the business is doing on terms of sales, receiving payments and paying out payments. Monitoring activity should involve keeping an eye on the bank balance to ensure there are sufficient funds to meet day to day expenses. The owner of the organisations would notice if the money going out of the bank was more than the sales coming through to the business this would make the owner make changes to his business. To be able to have control would happen through recording transactions and monitoring accounting if they are done properly and the organisation continue to have the correct transactions then...
Words: 613 - Pages: 3
...ILM Level 5 Award in Leadership and Management Unit 502 Making A Financial Case Assignment Assignment This cover sheet must preface every assessment submission; it is a regulatory requirement that every assessment is authenticated as the work of the named learner. Any submission without this sheet being completed will not be marked or verified. Centre Name | Dove Nest Group | Centre Number | 042814 | Learner Name | | Unit Covered in this Submission | 502 – Making A Financial Case | Date Submitted | | Statement of confirmation of authenticity By the act of making this submission, the learner certifies that this is the work of the learner named above. The work has not, in whole or in part, been knowingly presented elsewhere for assessment, or where assessment has been built on a previous assessment, this has been identified. Where materials have been used from other sources it has been properly acknowledged. If this statement is untrue, the learner acknowledges that an assessment offence has been committed. Attention is drawn to the plagiarism and cheating policies of both the centre and of ILM. Plagiarism can result in a learner being withdrawn from a qualification. | Permission for ILM to use this script ILM uses learners’ submissions – on an anonymous basis – for assessment standardisation. By submitting, both the centre and the learner agree that ILM may use this script on condition that identifying information is removed. However, if you are unwilling...
Words: 723 - Pages: 3
