What is the difference between equity expenditure and capital expenditure?

1. Equity expenses are all compensated by the operating income of the current year; Capital expenditures are recorded as assets and amortized annually through depreciation or amortization.

2. Equity expenses should be included in the cost of the current fiscal year and do not need to be allocated to subsequent years; Capital expenditures should be amortized over a number of income periods.

Capital expenditure: It is the expenditure required for the purchase or production of durable goods with a service life of more than one year, and refers to the expenditure incurred by the enterprise unit and its benefit in two or more fiscal years, including the expenditure constituting fixed assets, intangible assets and deferred assets. Revenue Expenditures:

It is also called a period fee. It refers to the expenses incurred by the enterprise in the course of operation, and its benefits are only related to the current fiscal year, so they are compensated by the income of the current year. When these expenses are incurred, they should be recorded in the relevant cost account for the current year.

Difference: Income expenditure is different from capital expenditure, the former is fully compensated by the operating income of the current year, and the latter is recorded as an asset first, and the cost of each year is amortized annually through depreciation or amortization. The distinction between revenue expenditure and capital expenditure is to correctly calculate the profit and loss from year to year and to correctly reflect the value of the asset.

If the revenue expenditure is regarded as capital expenditure, the result is that the current expenses are undercounted, the asset value is overcounted, and the profits are inflated; On the contrary, the current expenses are overcounted, the asset value is undercounted, and the profits are inflated.

Where the benefits of the expenditure extend to several fiscal years (or several business cycles), it should be treated as capital expenditure.

Revenue-generating expenses should be included in the costs of the current fiscal year and do not need to be amortized to subsequent years; Capital expenditures should be amortized over a number of income periods. For example, if an enterprise purchases a large-scale production equipment, the expenditure incurred by the enterprise on the purchase of the fixed asset is not only related to the current period, but also related to the following periods, and cannot be included in the current profit or loss, but should be included in the value of the fixed asset, that is, it belongs to capital expenditure. This expenditure should increase the original value of the fixed assets and gradually spread them over the period as the depreciation of the fixed assets increases.

The enterprise carries out daily maintenance of the production equipment, and the maintenance of fixed assets occurs every month, generally speaking, the repair cost is only related to the income of the repair period, and after this period, the repair will occur. This repair cost should be included in the current period of expenditure, that is, it is a revenue expenditure.

The monthly wages paid to workers by the enterprise are also income expenses.

Capital expenditures - symmetry of revenue expenditures or cost expenditures. It refers to the expenses incurred by the enterprise and its benefits in two or more fiscal years, including the expenses constituting fixed assets, intangible assets and deferred assets. For example, the expenditure on the acquisition of transport equipment, since the transport equipment can be used for several years, should be charged to the "Fixed assets" account.

The expenditure of transportation equipment shall be amortized to the costs and expenses of each year through depreciation according to the degree of wear and tear. This accounting treatment is called depreciation or amortization. The method of recording expenditures as assets is referred to as capitalization.

Capital expenditure is different from cost expenditure in that the former is borne by the operating income of each beneficiary year, and the latter is fully compensated by the operating income of the current year. The distinction between capital expenditure and cost expenditure is to correctly reflect the value of the asset and to correctly calculate the profit and loss for each year. If capital expenditure is regarded as revenue expenditure, the result is that the value of assets is undercounted, the expenses of the current year are overcounted, and the profits of the current year are inflated. On the contrary, the value of assets is overcounted, the expenses of the current year are undercounted, and the profits of the current year are inflated.

In practice, in order to simplify the accounting treatment, sometimes the capital expenditure of less than a certain amount is also treated as a cost expenditure.

Equity expenses refer to the total outflow of dividends, bonuses, etc., paid to investors, that is, the total outflow of economic benefits related to the distribution of profits to owners. Cost expenditure refers to the specific and necessary expenditure items of the unit to maintain normal operation, such as the cost of applying for licenses by relevant departments. Cost expenditure is different from capital expenditure, the former is fully compensated by the operating income of the current year, and the latter is borne by the operating income of each beneficiary year.

Revenue-generating expenditures refer to those expenditures that only extend to the current period in which the benefits of obtaining financial services are obtained. These expenditures shall be charged to the appropriate expense account as current expenses.

Capital expenditures refer to those expenditures incurred over multiple accounting periods in which the benefits of property or services are gained. Accordingly, such expenditures should be capitalized and charged to the asset class account and then transferred to the appropriate expense account in instalments based on the benefits obtained.

Article 20 of China's "Accounting Standards for Business Enterprises" stipulates that "accounting should reasonably divide revenue expenditure and capital expenditure. Where the benefits of the expenditure are related to the current fiscal year, it shall be regarded as a revenue expenditure; Where the benefits of expenditures are related to several fiscal years, they shall be treated as capital expenditures".

Therefore, whether an expenditure is a revenue expenditure or a capital expenditure, the principle of division is the length of the benefit period of the expenditure, if its income period is within an accounting year, then it is a revenue expenditure, if its income period exceeds an accounting period, then it should be the most capital expenditure.

To put it simply: revenue expenditure refers to the expenditure that should be included in the profit or loss for the current period.

Capital expenditure refers to the expenditure that cannot be included in the profit or loss of the current period at one time, and this expenditure should be reasonably allocated in subsequent periods.

For example, if you pay 20,000 yuan for lighting electricity, this electricity fee is consumed in the current period, and it should be used as a current expense, which affects the income of the current period, so it is a revenue expenditure.

If you buy a piece of equipment worth 20,000 yuan, it cannot be deducted as a one-time expense. Instead, it should be included in the fixed assets, and the depreciation of the equipment should be calculated in a reasonable way during the subsequent benefit period, and the cost should be included in the installments. The expenditure of this equipment is the capital expenditure.

one, Capex (capital expenditure): Capital expenditure, refers to the inflow of benefits from property or services obtained from expenditure that can be sustained in multiple accounting periods in the future. Accordingly, such expenditures should be capitalized and charged to the asset class account first, and then transferred to the appropriate expense account in installments.

In the business activities of an enterprise, assets that have been used for a long time and whose economic life will last for many accounting periods, such as fixed assets, intangible assets, deferred assets, etc., should be regarded as capital expenditures. That is, it is capitalized first to form fixed assets, intangible assets, deferred assets, etc.

The cost is then converted into an expense in installments. Such as: depreciation of fixed assets, amortization of intangible assets and deferred assets, etc.

Capital investment expenditure refers to the capital expenditure used for infrastructure construction, expansion of reproduction, etc., which needs to be amortized in installments over multiple fiscal years. Since the decision-making power of strategic investment is not in the local network, CAPEX is limited to rolling investment and does not include strategic investment in BPR's index assessment. The main indicators are the CAPEX revenue ratio and the investment and return on investment (ROI), the former is the CAPEX revenue ratio, which reflects the proportion of capital expenditure to revenue; The latter reflects the return on investment.

The calculation formula is: capex = strategic investment + rolling investment.

II. II. IIOPEX is (operating expense), that is, revenue expense, which is related to the current income and is included in the current profit or loss, including daily expenses and capital expenditure amortized in the current period.

The calculation formula is: OPEX = maintenance expenses + marketing expenses + labor costs (+ depreciation).

Revenue-generating expenses refer to expenditures with a benefit period of no more than one year or one business cycle, i.e., the expenses are incurred solely for the purpose of obtaining current income; Capital expenditure is the expenditure that is solely for the purpose of obtaining current income; Capital expenditure refers to expenditure with a benefit period of more than one year or one business cycle, that is, the expenditure is incurred not only to obtain income in the current period, but also to obtain income in subsequent periods.

For example, the purchase of raw materials is a revenue expenditure, and the construction of a house is a capital expenditure.