In my new role, I have to split projects between revenue projects and capital projects. Can anyone explain the differences to me? I know it's to do with the funding...

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The costs for a revenue project are treated as direct cost on your company. So that diminishes your profits as shown on your profit & loss account.

In a capital project the costs are treated instead as an investment. This doesn't show on your profit and loss, but rather shows on your balance sheet as an application of funds. So where you had say an asset in the form of £1m cash, now you have an asset in the form of £1m (for example) new production plant.

You may imagine that both these come to the same thing in that money is spent, and indeed the Cash Flow statement will reflect this.

But it's important for the company and investors to differentiate between a pure cost (P&L) and an investment (Balance Sheet).

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Revenue expense are costs in the for day to day running of the business for example servicing a machine, spare parts etc. Revenue expenditure is normally charged against profit in the Income statement in the year it is expensed.

Capital expenditure is on an item that will help generate profits over the longer term (12 months or more) so a purchase of a machine or van etc. The item is depreciated over the items useful life and each depreciateable amount is charged to the Income statement in the year the item has help generate profit

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Revenue expense are costs in the for day to day running of the business for example servicing a machine, spare parts etc. Revenue expenditure is normally charged against profit in the Income statement in the year it is expensed.

Capital expenditure is on an item that will help generate profits over the longer term (12 months or more) so a purchase of a machine or van etc. The item is depreciated over the items useful life and each depreciateable amount is charged to the Income statement in the year the item has help generate profit

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