1. As a Book-Keeper it is important that you can identify and categorise items of business income and expenditure Income (business receipts) – can either be Capital Income or Revenue Income Expenditure (business payments) – can either be Capital Expenditure or Revenue Expenditure

2. Capital Income Is income borrowed by the business. Such income will be used to finance the setting- up and expansion of the business It includes capital invested by the owner of a business and funds taken other persons or organisation who provide finance to a business on a long term basis

3. Revenue Income This is income earned by the business from its trading or non trading activities Trading income is from sales made to customers of the business Non Trading income could be from interest received on money that has been invested or rent received on a property that is sub-let by a business etc

4. Capital Expenditure Expenditure which has a long-term effect on the profit making capacity of a business For example – payments to buy fixed assets (items purchased for use in the business over several years), it also includes payments made to install, modify and improve fixed assets

5. Revenue Expenditure This type of expenditure has a short-term effect on the profit making capacity of a business for example payments made to purchase goods for resale and business expenses.

6. Examples of business expenses are as follows: Rent Rates Insurances Heating and lighting Wages and salaries Telephone line rental and call charges Vehicle running costs (road tax, insurance, fuel and repairs) Repairs and maintenance of fixed assets