Capital expenditure: The expenditure incurred for the purchase of a fixed asset or addition to the fixed assets which are useful to the business for more than one accounting year. The capital expenditure is recorded in the balance sheet. Eg. Purchase of plant and machinery, purchase of land, addition to the building etc.
Revenue expenditure: The expenditure incurred due to day to day activities of the business such as salaries, wages, rent etc. The revenue expenditure is recorded in the trading and profit and loss account