Inter-Relationship Between P & L A/c and Balance sheet

The importance of matching revenue and expenditure has already been mentioned in a previous context. To advance the discussions on the Final Accounts, i.e. Financial Statements (i.e. P & L A/c and BS), it is helpful to first clearly understand the nature and types of different expenditures and receipts. These can be either of the capital category or the revenue category. Thus, an axpenditure can be either a CAPITAL EXPENDITURE or a REVENUE EXPEIVDITURE. Likewise, a receipt can be either a CAPITAL RECEIPT or a REVENUE RECEIPT.