• Rent that the business may receive from leasing part of its premises to another business.
• Any interest received by the business on money in its bank accounts.
Expenses are regular, ongoing payments that must be made when running a business. These are costs incurred in addition to purchasing stock. Expenses are also known as overheads.
Light and heat Stationery
Examples of business expenses (overheads) Staff wages/salaries
Rent paid out for premises Rates paid to local authorities Market research Advertising
Repairs to equipment
Commission paid to staff Staff travel expenses Security
Insurance
Bad debts (unpaid bills) Interest paid on bank loans
Carriage outwards (delivery costs) Cleaning and maintenance Postage
General / office expenses Telephone and internet expenses Auditors’ fees Revenue expenditure or capital expenditure?
Business spending can be classified as revenue expenditure or capital expenditure.
¶
Revenue (or current) expenditure refers to all the day-to-day expenses of the business included in the profit and loss account, such as electricity and stationery supplies. The business only benefits from revenue expenditure in the year the money is paid. Revenue expenditure is also known as current expenditure.
¶
Capital expenditure is spending on fixed assets that are expected to benefit the business for a number of years. For example, the purchase of a delivery truck or warehouse. Capital expenditure does not go into the profit and loss account, but will appear in the statement of financial position.
For more information on the Statement of Financial Position see Chapter 23: Measuring Business Wealth.
