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Capital expenditure (CapEx) refers to the funds used by a company to acquire or upgrade physical assets such as property, buildings, and equipment. These expenditures are typically long-term investments aimed at improving future performance or extending the life of an asset. CapEx is recorded on the balance sheet and is depreciated over time.

Revenue expenditure, on the other hand, entails the costs that a company incurs for its day-to-day operations. These expenses are short-term in nature and are necessary for maintaining the business’s current operational capacity. Revenue expenditures are typically recorded on the income statement and are fully deducted in the period they are incurred.

In summary, the main difference lies in their purpose and accounting treatment: CapEx is for long-term investment in assets, while revenue expenditure is for ongoing operational costs.