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| Question | Answer |
| What are the two classifications of INCOME in double entry bookkeeping? | Business income is classified as being either capital income or revenue income. |
| What is the definition of CAPITAL INCOME? | Capital income is income borrowed by the business. Such income is used to finance the setting-up of and expansion of the business. It includes capital invested by the owner(s) and funds borrowed from other persons or organisations. |
| What is the definition of REVENUE INCOME? | Revenue income is income earned by the business from its trading or non-trading activities. |
| What are the two classifications of EXPENDITURE in double entry bookkeeping? | Business expenditure is classified as being either capital expenditure or revenue expenditure. |
| What is the definition of CAPITAL EXPENDITURE? | Capital expenditure is expenditure which has a long-term effect on the profit making capacity of the business. It includes payments made to buy fixed assets, as well as payments made to install, modify and improve fixed assets. |
| What is the definition of REVENUE EXPENDITURE? | Revenue expenditure is expenditure which has short-term effect on the profit making capacity of the business. It includes payments made for goods for resale, business expenses like rent, insurance, heating, vehicle running costs and repair/maintenance of fixed assets. |
| An example of business income and expenditure. |
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