Reflection
Jamie Shuster
XACC 291
July 19, 2015
Carmela Hicks

Reflection During the normal operation of a business there will always be cost incurred for running an organization. During the useful life of a plant asset, a company may incur costs for ordinary repairs, additions, or improvements (Stormo, 2009 p 409). Every day we have ordinary repairs and then we have additions and improvements. Costs incurred for ordinary repairs are considered as revenue expenditures. Ordinary repairs are expenditures that are used to maintain the operating efficiency and productive life of the unit costs acquired for additions and improvements are considered capital expenditures. Companies require revenue expenditures to maintain the operating efficiency and productive life of an asset. Usually these small costs occur frequently. Examples of revenue expenditures are, oil changes and tune-ups, maintenance charges, repairs costs, renewal expenses, and repainting costs. Companies record the entry of revenue expenditures as a debit to Repair or Maintenance Expense as they are obtained, and a credit to cash or accounts payable (Stormo, 2009).
Companies acquire capital expenditures to increase the operating efficiency, productive capacity, or useful life of an asset. Usually these rather big costs occur infrequently. Capital expenditure is money is being spent on assets that will increase the company’s ability to pull in profit or operate at a higher work level (Accounting-Simplified, 2013). Examples of capital expenditures are Purchase costs, delivery costs, legal charges, installation costs, replacement costs, construction costs, and demolition cost. Companies generally record the entry of a capital expenditure as a debit to the Plant Asset affected, and a credit to cash or accounts payable (Stormo, 2009). Land Improvements, Building, and Equipment all