(i) An expenditure, which is revenue expenditure in nature, the benefit of which is to be derived over a subsequent period or periods is known as deferred revenue expenditure.
(ii) The benefit usually accrues for a period of two or more years.
(iii) It is for the time being, deferred from being charged against income.

1. The profit realised over and above the cost of the fixed asset is called capital profit.
2. Capital profit is the profit which arises not from the normal course of the business. Profit on sale of fixed asset is an example for capital profits.

The expenditure incurred for day to day running of the business or for maintaining the earning capacity of the business is known as revenue expenditure. It is recurring in nature.

i) a) Rs.2,000 spent on additions should be treated as capital expenditure
b) Rs.1200 spent on repairs should be treated as revenue expenditure.
ii) Overhauling expenses are incurred for the engine of a motor car to get better fuel efficiency. So this expenditure should be treated as capital expenditure.

i) Carriage of Rs.1,000 spent on machinery purchased and installed is capital expenditure.
ii) Office rent paid Rs.2,000 is revenue expenditure.
iii) Wages of Rs.5,000 paid to machine operators is revenue expenditure.
iv) Hire charges for the use of motor vehicle, hired for five years, but paid yearly is revenue expenditure.