Business Management SL
Business Management SL
6
Chapters
175
Notes
Unit 1 - Introduction To Business Management - QB
Unit 1 - Introduction To Business Management - QB
Unit 2 - Human Resource Management - QB
Unit 2 - Human Resource Management - QB
Unit 3 - Finance & accounts - QB
Unit 3 - Finance & accounts - QB
Unit 4 - Marketing - QB
Unit 4 - Marketing - QB
Unit 5 - Operations management - QB
Unit 5 - Operations management - QB
Unit 6 - Assessment
Unit 6 - Assessment
IB Resources
Unit 3 - Finance & accounts - QB
Business Management SL
Business Management SL

Unit 3 - Finance & accounts - QB

Understanding Capital Vs. Revenue Expenditure In Business

Word Count Emoji
627 words
Reading Time Emoji
4 mins read
Updated at Emoji
Last edited onย 5th Nov 2024

Table of content

Why do businesses need money? ๐Ÿ’ฐ

  • Starting up a business ๐Ÿš€
  • Running day-to-day operations โฐ
  • Planning for future growth ๐ŸŒณ

๐Ÿ’ญ Think of a business like a car. It needs fuel to start, run, and also some savings to get repairs or upgrades in the future.
 

Finance can play two big roles

  • Capital Expenditure (CapEx)
  • Revenue Expenditure (RevEx)

Capital expenditure (capex) ๐Ÿ› 

  • Definition: Money spent on items lasting for more than a year. It's like the big stuff you don't buy every day.

  • Examples

    • Machinery ๐Ÿญ
    • Land ๐ŸŒ„
    • Buildings ๐Ÿข
    • Vehicles ๐Ÿšš
    • Equipment ๐Ÿ–จ
  • Purpose: These are for the long-haul! They help a business generate income over many years.

  • Cool Fact: Businesses can use CapEx items as collateral (kinda like when you promise to give your video game to your friend if you don't return their book). For example, a bank might give a loan because a business offers its building as security.

๐Ÿ’ก Real-world example: A pizza delivery service buying a new delivery van. They'll use it for years to deliver yummy pizzas to homes! ๐Ÿ•

Revenue expenditure (revex) ๐Ÿ›’

  • Definition: The day-to-day spending needed to keep the business running. Think of it like buying groceries for your home.

  • Examples

    • Rent ๐Ÿข
    • Salaries ๐Ÿ’ต
    • Raw materials ๐ŸŒพ
    • Insurance ๐Ÿ“ƒ
    • Fuel โ›ฝ
  • Purpose: Unlike CapEx, RevEx doesn't look at the long-term. It's more about keeping the lights on today!

๐Ÿ’ก Real-world example: A school spending its funds on teacher salaries and cafeteria food. But hey, if they keep spending and never save, they won't have enough to build a new sports hall or fancy computer lab!

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Dive deeper and gain exclusive access to premium files of Business Management SL. Subscribe now and get closer to that 45 ๐ŸŒŸ

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IB Resources
Unit 3 - Finance & accounts - QB
Business Management SL
Business Management SL

Unit 3 - Finance & accounts - QB

Understanding Capital Vs. Revenue Expenditure In Business

Word Count Emoji
627 words
Reading Time Emoji
4 mins read
Updated at Emoji
Last edited onย 5th Nov 2024

Table of content

Why do businesses need money? ๐Ÿ’ฐ

  • Starting up a business ๐Ÿš€
  • Running day-to-day operations โฐ
  • Planning for future growth ๐ŸŒณ

๐Ÿ’ญ Think of a business like a car. It needs fuel to start, run, and also some savings to get repairs or upgrades in the future.
 

Finance can play two big roles

  • Capital Expenditure (CapEx)
  • Revenue Expenditure (RevEx)

Capital expenditure (capex) ๐Ÿ› 

  • Definition: Money spent on items lasting for more than a year. It's like the big stuff you don't buy every day.

  • Examples

    • Machinery ๐Ÿญ
    • Land ๐ŸŒ„
    • Buildings ๐Ÿข
    • Vehicles ๐Ÿšš
    • Equipment ๐Ÿ–จ
  • Purpose: These are for the long-haul! They help a business generate income over many years.

  • Cool Fact: Businesses can use CapEx items as collateral (kinda like when you promise to give your video game to your friend if you don't return their book). For example, a bank might give a loan because a business offers its building as security.

๐Ÿ’ก Real-world example: A pizza delivery service buying a new delivery van. They'll use it for years to deliver yummy pizzas to homes! ๐Ÿ•

Revenue expenditure (revex) ๐Ÿ›’

  • Definition: The day-to-day spending needed to keep the business running. Think of it like buying groceries for your home.

  • Examples

    • Rent ๐Ÿข
    • Salaries ๐Ÿ’ต
    • Raw materials ๐ŸŒพ
    • Insurance ๐Ÿ“ƒ
    • Fuel โ›ฝ
  • Purpose: Unlike CapEx, RevEx doesn't look at the long-term. It's more about keeping the lights on today!

๐Ÿ’ก Real-world example: A school spending its funds on teacher salaries and cafeteria food. But hey, if they keep spending and never save, they won't have enough to build a new sports hall or fancy computer lab!

Unlock the Full Content! File Is Locked Emoji

Dive deeper and gain exclusive access to premium files of Business Management SL. Subscribe now and get closer to that 45 ๐ŸŒŸ