Is subsidy a capital or revenue expenditure?
Subsidies are treated as revenue expenditure as it does not reduce the liability of the government and it does not add to assets of the government.
Are subsidies revenue expenditure?
Revenue Expenditure is that part of government expenditure that does not result in the creation of assets. Payment of salaries, wages, pensions, subsidies and interest fall in this category as revenue expenditure examples. Also, note that revenue expenses are incurred by the government for its operational needs.
Which type of expenditure is subsidy?
It is a part of non-plan expenditure of the government. Major subsidies in India are petroleum subsidy, fertiliser subsidy, food subsidy, interest subsidy, etc.
What is included in revenue expenditure?
A revenue expenditure is a cost that is charged to expense as soon as the cost is incurred. … Maintaining a revenue generating asset. This includes repair and maintenance expenses, because they are incurred to support current operations, and do not extend the life of an asset or improve it. Generating revenue.
What are the types of revenue expenditure?
There are various types of revenue expenditures.
- Printer Repair Costs. Most businesses use printers on a daily basis to print reports, customer files, emails and receipts. …
- Montly Rental Expenses. …
- Phone and Internet Costs. …
- Cost for Packaging Supplies. …
- Upgrading Inventory Software. …
- Cash Register Repair.
Why repayment of loan is a capital expenditure?
Repayment of loan is a capital expenditure as it causes reduction in liabilities of the government. We know, capital expenditure refers to those expenditures which either creates assets for the government or causes reduction in liabilities of the government.
Is a revenue expenditure?
Revenue expenditures are short-term expenses used in the current period or typically within one year. Revenue expenditures include the expenses required to meet the ongoing operational costs of running a business, and thus are essentially the same as operating expenses (OPEX).
How is revenue expenditure calculated?
Typically, revenue expenditure incurred by a firm is reported on its Income Statement.
Revenue Expenditure Example.
|Cost of revenue||3,51,25,600|
Is a loan a capital expenditure?
The purchase of large, long-term assets that depreciate over time is a capital expenditure. … Many companies use debt financing or retained earnings to finance capital expenditures, but some use equity financing. Hence the use of the term “capital” to describe the expenditure.
Is subsidy good or bad?
In short, any subsidy that benefits women, the poor and the marginalised is good; their growth propels national growth. … Similarly, subsidies for loans given for secondary agriculture initiatives reduce the burden on primary agriculture activities, and also help whittle down disguised unemployment in the agri-sector.
What is a subsidy example?
Examples of Subsidies
There are many forms of subsidies given out by the government. Two of the most common types of individual subsidies are welfare payments and unemployment benefits. … Other subsidies, such as subsidized interest rates on student loans, are given to encourage people to further their education.
What is subsidy price?
Meaning of subsidized price in English
a price for a product that is reduced because the government has paid part of the cost of producing it: Officials told farmers what to grow, bought their crops, and sold them at subsidized prices.
What is revenue expenditure give example?
Any expense that recurs consistently over a given time is a revenue expense. For example, any maintenance costs to a building owned by your company are revenue expenditures.
What is main characteristic of revenue expenditure?
There are following main features or characteristics of revenue expenditures . These features are very useful for your decision to adding any expenses in profit and loss account . These type of expenses are related to short period, means benefit of these expenses is less than one year.
Is advertising a capital expenditure?
ADVERTISING AS A START-UP COST
To the extent advertising is classified as a start-up expenditure, companies are required to capitalize it. For example, a new business that buys ads to promote its opening should clearly capitalize the cost.