FINANCE TERMS IV

CAPITAL EXPENDITURE:
All expenditure which results in the acquisition of permanent assets which are intended to continually use in the business for the purpose of earning revenue is capital expenditure.
All the capital expenditure receipts and payments are taken into balance sheet.

REVENUE EXPENDITURE:
An amount spent for earning or providing revenue is called revenue expenditure.
All the revenue expenditures and receipts are taken to trading and profit & loss account.

DOCK CHARGES:
These charges are levied on ship and their cargo when entering or leaving docks. If dock charges are paid on goods they are taken to the debit side of trading account.
{DOCK: a part of a port where ships are repaired or where goods are put onto or taken off them}

MARSHALLING OF BALANCE SHEET:
The arrangement of items in balance sheet in a proper way is known as marshalling of balance sheet.
They are of two types:
1) Liquidity Order
2) Permanence Order

EXTERNAL RECONSTRUCTION:
When one existing company goes into liquidation and a new company is formed for the purpose of buying its business is known as external reconstruction.

PECULIAR FINANCIAL WORD

USANCE BILLS: The bills drawn and accepted payable after three months is called usance bills.