Depreciation on fixed assets is an example of

The correct answer is Revenue expenditure.

Key Points

Depreciation:

• Depreciation is the systematic reduction of a fixed asset's recorded cost until the asset's value equals zero.
• Depreciation enables a portion of the cost of a fixed asset to be applied to the income the fixed asset generates, whether significant or small.
• According to the matching principle, this is required since revenues and associated expenses are recorded in the accounting period during which the asset is in use.
• Depreciation of fixed assets is an example of a revenue expenditure transaction. 
• When a cost is incurred, it is immediately applied to an expense as a revenue expenditure.

Important PointsRevenue Expenditure :

• Short-term expenses used in the present time or often within a year are referred to as revenue expenditures.
• Revenue expenditures are essentially the same as operating expenses because they cover the costs associated with maintaining a business.

There are two types of Revenue Expenditures which are as follows:

• Maintaining a Revenue Generating Assets: Repair and maintenance costs are included in the maintenance of a revenue-generating asset since they are incurred to maintain ongoing operations rather than to improve or extend the life of the asset.
• Generating Revenue: All ongoing costs connected with running a business, such as rent, office supplies, and utilities, are included in expenses related to revenue generating. Because they are directly related to the time period in which they were incurred, these expenses are also known as period expenses.