Why do revenues increase capital while expenses decrease capital?
Because cash is a form of capital.
Revenues increase capital because they represent the inflow of cash or assets into a business. When a business generates revenue, it receives payment for its goods or services, increasing its cash or asset holdings. This increase in cash or assets contributes to the business's overall capital.
On the other hand, expenses decrease capital because they represent the outflow of cash or assets from a business. Expenses are the costs incurred in the process of generating revenue or maintaining business operations. When a business pays for expenses, its cash or asset holdings decrease, which in turn reduces its capital.
In summary, revenues increase capital because they add cash or assets to a business, while expenses decrease capital because they involve the expenditure of cash or assets.