Revenue expenditure is money spent in a way that affects the business short term. Which is an example?

• A. Paying salaries
• B. Purchasing machinery
• C. Rent
• D. Selling a vehicle

Answer: (A)

Revenue expenditure are the day-to-day running costs that are used up in the current period and charged to the income statement. Paying salaries fits this because it's a regular cost for staff tied to the current period; it does not create or extend a lasting asset, so it’s recorded as an expense now and reduces profit this year.

By contrast, buying machinery creates a long-term asset. Its cost isn’t charged to the income statement all at once; instead it’s capitalised and spread as depreciation over the asset’s useful life. Rent is also a revenue expense for the period it's paid, since it covers the use of premises in the current period. Selling a vehicle isn’t an expense for the period; it’s the disposal of an asset and would affect cash and possibly a gain or loss on disposal, not operating revenue or expense.

So paying salaries is the example of revenue expenditure.