replacing all burned-out light bulbs in the factory cleaning the carpet in the front room tune-up for a company truck Replacing an engine in a company car is an example of a capital expenditure.
Full Answer
Which of the following is an example of a capital expenditure?
Capital expenditures are long-term investments, meaning the assets purchased have a useful life of one year or more. Types of capital expenditures can include purchases of property, equipment, land, computers, furniture, and software.
What is capital expenditure expenses?
Capital expenditures are payments made for goods or services that are recorded or capitalized on a company's balance sheet instead of expensed on the income statement. Spending is important for companies to maintain existing property and equipment, and to invest in new technology and other assets for growth.
What are the three types of capital expenditures?
Capital expenditure is classified into three main forms viz:Expenditure made to reduce costs;Expenditure made to increase revenue;Expenditure which is justified on non-economic grounds.
Which item should be treated as capital expenditure?
Examples of capital expenditures are funds paid out for buildings, computer equipment, machinery, office equipment, vehicles, and software.
Which of the following is capital expenditure Mcq?
Capital expenditure or capital expense is the money an organization or corporate entity spends to buy, maintain, or improve its fixed assets, such as buildings, vehicles, equipment, or land. Wages paid on the installation of machinery is treated as a capital expenditure.
Which of the following is not capital expenditure?
When companies make a revenue expenditure, the expense provides immediate benefits, rather than long term ones. Examples of revenue expenditure are wages or salaries paid to factory workers, machine Oil to lubricate. Hence option B is not the capital expenditure.
What are capital items?
long-lived business assets of a firm; these items usually include buildings, plant and equipment.
What are the two types of capital expenditure?
Capital expenditures usually take two forms: acquisition expenditures and expansion expenditures. Due to their substantial initial costs, irreversibility, and long-term effects, capital expenditure decisions are very critical to an organization.
How do you find capital expenditures?
Follow these steps to calculate capital expenditures:Obtain your company's financial statements. To calculate capital expenditures, you'll need your company's financial documents for the past two years. ... Subtract the fixed assets. ... Subtract the accumulated depreciation. ... Add total depreciation.
Which of the following is a capital transaction?
Capital Transaction means any of the following transactions: (a) a sale, refinancing, repayment, exchange, transfer, assignment or other disposition of all or a portion of any asset (but not including occasional sales in the ordinary course of business of inventory, furniture, fixtures and equipment); (b) any ...
What is capital expenditure class 12?
Definition of Capital Expenditure (Class 12) Capital Expenditure refers to the expenditure which either creates an assets or causes a reduction in the liabilities of the government.
What is capital nature expenditure?
Capital Nature Capital expenditures include large purchases of fixed assets that can be used for a longer duration. In other words, the acquisition of fixed assets for certainly longer durations represents the capital nature of expenditure.
What is capital expenditure on balance sheet?
Capital expenditures are the amounts spent for tangible assets that will be used for more than one year in the operations of a business. Capital expenditures, which are sometimes referred to as capex, can be thought of as the amounts spent to acquire or improve a company's fixed assets.
Are laptops capital expenditure?
From an income tax perspectives, businesses typically prefer OpEx to CapEx. For example, rather than buy laptops and computers outright for $800 apiece, a business may prefer to lease it from a vendor for $300 apiece for 3 years. This is because buying equipment is a capital expense.
What is capital expenditure formula?
The CapEx formula from the income statement and balance sheet is: CapEx = PP&E (current period) – PP&E (prior period) + Depreciation (current period) This formula is derived from the logic that the current period PP&E on the balance sheet is equal to prior period PP&E plus capital expenditures less depreciation.
What is a capital expense VS operating expense?
CapEx vs. OpEx: Key DifferencesCapital ExpenseOperating ExpenseBudgetingRequires upfront one-time paymentOngoing expenseApproval processOften has a more complicated approval process requiring high-level approvalOften has a straight-forward, pre-approved process in place1 more row
Answer
The correct answer is letter "A": replacing an engine in a company car.
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