CAT / FIA FFM Syllabus E. Investment Decisions - Investment in NCA vs. investment in WC - Notes ^{4 / 5}

Revenue expenditure results from the purchase of goods and services that will either:

• Be used fully in the accounting period in which they are purchased, and so be a cost or expense in the statement of profit or loss (P&L), or

• Result in a current asset as at the end of the accounting period because the goods or services have not yet been consumed or made use of 

  The current asset would be shown in the statement of financial position (SFP) and is not yet a cost or expense in the (P&L).

Capital expenditure

results in the purchase or improvement of non-current assets, which are assets that will provide benefits to the business in more than one accounting period, and which are not acquired with a view to being resold in the normal course of trade.

The cost of purchased non-current assets is not charged in full to the P&L of the period in which the purchase occurs. 

Instead, the non-current asset is gradually depreciated over a number of accounting periods.