ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -For businesses, a capital asset is an asset with a useful life longer than a year that is not intended for sale in the regular course of the business’s operation. This also makes it a type of production cost. For example, if one company buys a computer to use in its office, the computer is a capital asset.

Detailed explanation-2: -Capital investments are long-term investments in which the assets involved have useful lives of multiple years. For example, constructing a new production facility and investing in machinery and equipment are capital investments.

Detailed explanation-3: -Investing activities include purchases of long-term assets (such as property, plant, and equipment), acquisitions of other businesses, and investments in marketable securities (stocks and bonds).

Detailed explanation-4: -Computer hardware is a long-term asset because it has a useful life of more than one year. Capital expenditures are recorded on the balance sheet as assets. Examples of capital expenditures include: Computers.

Detailed explanation-5: -The definition of owner’s equity is the owner’s investment in an asset after they deduct any liabilities. It’s the difference between the number of assets and the value of liabilities that allows the owner to know what they own after paying off debts. Owner’s equity is also called net worth or net assets.