Revenue and Capital Expenditure

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Companies incur costs to acquire resources that will be used in operations to generate profits. Every cost creates either an immediate benefit or a future economic benefit. Determining when the company will realize the benefit from a cost is paramount. When a cost creates an immediate benefit, such as fuel used in delivery vehicles, the company records the cost in the income statement as an expense. When a cost creates a future economic benefit, such as purchase of delivery vehicles to deliver the goods now and later, the company records the cost on the statement of financial position as an asset. #pdf

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on 20 January 2015

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