OCR Level 3Cambridge Technicals

in Business

Unit 4: Business Accounting

Capital and Revenue

Capital IncomeCapital IncomeThe money used to set up a business – initial

investment - sole trader/partnership

Share capital – Private and Public limited companies

Further investment into the business

by owners

Loans received from a third party

Revenue IncomeRevenue IncomeMoney received from normal business

activity – sales revenue

Rent received

Commission received

Capital ExpenditureCapital ExpenditureExpenditure incurred on the purchase,

alteration or improvement of fixed assets

Fixed assets - items that will be used in the business longer than

one year

Capital expenditure includes the following:

Improvement to fixed assets – not repair

Legal costs of buying property

Revenue ExpenditureRevenue ExpenditureExpenditure incurred on running expenses.

Running expenses – costs that are incurred in the running of the business which are not directly related

to sales. These would include:

Rent, rates, interest payments on a loan

Utility bills – gas, water, electricity

Running costs of vehicles – petrol

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