BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Cost of new tires bought to replace the old tires of the firm’s lorry.
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Cost of repainting the firm’s lorry.
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Cost of replacing the engine of the firm’s lorry.
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Cost of increasing the seating capacity of the firm’s motor van.
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Detailed explanation-1: -Examples of capital expenditures made to increase or improve assets include the purchase of: new work equipment, machinery, land, plants, buildings, warehouses, furniture, fixtures, vehicles, hardware, software, and intangible assets such as patents and licenses.
Detailed explanation-2: -Explanation: 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.
Detailed explanation-3: -Investment in Assets which helps to increase its output and efficiency is called capital expenditure, Fixed asset helps to increase the earning capacity by providing efficient product output.
Detailed explanation-4: -Capital expenditure (CapEx) is money that is spent to acquire, repair, update, or improve a fixed company asset, such as a building, business, or equipment. A CapEx is different from an everyday business, which falls under the operating expense category.