Definition

Revenue expenditures are costs incurred by a business to maintain its day-to-day operations.

Every business has to spend a significant amount of money on its operational activities. These costs are classified as revenue expenditures or operating expenses and are charged to the Profit and loss statement. These costs are fundamental in maintaining the business’s day-to-day activities in a short-term period. The economic benefits must be derived from revenue expenditure mandatory to run the business operations smoothly.

Accounting Treatment

Revenue expenditures are charged to the statement of comprehensive income to ascertain profit or loss i.e. Subtracting Operating expenses from gross profit.

Examples

Day to Day Maintenance

The most important aspect of revenue expenditure is to achieve order in the business. These costs make sure that business operations are running smoothly and achieving productive efficiency. Expenses such as Salaries, rent, and utilities make sure daily operational requirements are met.

Revenue Generation

Marketing campaigns, sales incentives, commissions, and many other expenditures directly contribute to the revenue generation of the business.

Examples

Salaries and Wages: This refers to the remuneration paid to the workers and employees.
Rent: Rent is the monthly payment for the occupation of the property as per the engaging parties’ agreement.
Utilities: This may include but is not limited to Electricity and gas bills.
Advertising: Running marketing campaigns.
Repair and maintenance: