What are different types of expenditure and examples of each

For the purpose of accounting, there are three types of expenditure.

1) Capital Expenditure

It is the amount incurred in acquiring long term assets like land, buildings, equipments (which are used for the purpose of earning revenues). These costs are reflected in the account of Property, Plant and Equipment.

2) Revenue Expenditure

It is the cost incurred in one accounting year wherein the benefits are also enjoyed in the same period only. It does not increase the earning capacity of the business, instead, it maintains the existing earning capacity of said business. This expenditure is recurring in nature like salaries and wages, selling and distribution expenses.

3) Deferred Revenue Expenditure

It is a revenue Expenditure which has been incurred within the current accounting year but its benefit will be extended to a number of years. This cost is charged to the Profit and Loss account. Example of this is advertising cost.