Which of the following best defines revenue expenditure?

• A. Purchase of long-term assets.
• B. Revenue expenditure refers to day-to-day operating costs incurred regularly to maintain operations, such as wages, energy costs, and raw materials.
• C. Debt repayment.
• D. Investment in expansion projects.

Answer: (B)

Revenue expenditure covers the everyday costs that keep the business running and generate revenue in the current period. It includes regular operating expenses like wages, energy bills, and raw materials. These costs are recorded as expenses in the income statement in the period they are incurred and do not create a lasting asset.

In contrast, purchasing long-term assets, repaying debt, or investing in expansion projects are considered capital expenditures because they aim to bring benefits over multiple periods and are treated as assets or financial changes rather than immediate expenses.