Unit 2 P2
P2)
For this task I will start of by explaining the difference between capital income and revenue income and the difference between capital expenditure and revenue expenditure. I will then have a short table which will state what would go inside both capitals and revenues.
Firstly I am going to talk about what capital income is. Capital income is usually the money which is used to invest by the owner of the business from there start-up cost. An example of capital income would be sales of shares or sales of properties. Capital income tends to be the items which have been purchased only to be used within the business for either a short or long term period of time such as premises, car or equipment, these would be known as ‘fixed assets’. The source of capital income which may be available to business owner can be influences by which type of business they are.
Revenue income would be the money in which the business receives from their day-to-day activities of the business. An example of revenue income would be when people receive sales or when landlords receive rent from the tenants and last example would be when people receive discounted money. Revenue income depends on the types of activities that the business does in order to bring in money and there are three types of main sources for revenue income and they are sales, …show more content…
rents receive and commission receive. Commission is the percentage paid on a sale made by a person within the business.
Now onto capital expenditure, this is where the fixed assets are purchased by businesses which are to be used for production use only.
However if they are bought they are not to be sold in order to generate any future profits for the business. An example of the type of fixed assets which would be purchase by businesses and not used would be things like machines, warehouses, equipment, land etc. Expenditure would be the money spent by the business that can be split into two different categories such as capital expenditure and revenue expenditure. It is used to by capital items which will be an asset towards businesses for a long term
basis.
The last factor to talk about would be revenue expenditure, this is everyday items which the business spends money on such as stationary, products/stock, cleaning products, rent, gas, water, electricity, wages, salary, transport expenses and miscellaneous-little expenses such as milk, coffee, biscuits etc. These expenses incurred by the business are shown on the profit and loss account. The types of costs vary from business to business (b2b) however some of common types include premises costs, staff costs, administrative costs and finance costs.
For this task I will start of by explaining the difference between capital income and revenue income and the difference between capital expenditure and revenue expenditure. I will then have a short table which will state what would go inside both capitals and revenues.
Firstly I am going to talk about what capital income is. Capital income is usually the money which is used to invest by the owner of the business from there start-up cost. An example of capital income would be sales of shares or sales of properties. Capital income tends to be the items which have been purchased only to be used within the business for either a short or long term period of time such as premises, car or equipment, these would be known as ‘fixed assets’. The source of capital income which may be available to business owner can be influences by which type of business they are.
Revenue income would be the money in which the business receives from their day-to-day activities of the business. An example of revenue income would be when people receive sales or when landlords receive rent from the tenants and last example would be when people receive discounted money. Revenue income depends on the types of activities that the business does in order to bring in money and there are three types of main sources for revenue income and they are sales, …show more content…
rents receive and commission receive. Commission is the percentage paid on a sale made by a person within the business.
Now onto capital expenditure, this is where the fixed assets are purchased by businesses which are to be used for production use only.
However if they are bought they are not to be sold in order to generate any future profits for the business. An example of the type of fixed assets which would be purchase by businesses and not used would be things like machines, warehouses, equipment, land etc. Expenditure would be the money spent by the business that can be split into two different categories such as capital expenditure and revenue expenditure. It is used to by capital items which will be an asset towards businesses for a long term
basis.
The last factor to talk about would be revenue expenditure, this is everyday items which the business spends money on such as stationary, products/stock, cleaning products, rent, gas, water, electricity, wages, salary, transport expenses and miscellaneous-little expenses such as milk, coffee, biscuits etc. These expenses incurred by the business are shown on the profit and loss account. The types of costs vary from business to business (b2b) however some of common types include premises costs, staff costs, administrative costs and finance costs.