GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Loss of stock by fire
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Loss due to embezzlement by the manager
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Compensation paid for breach of a contract to supply goods
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Interest on borrowings during the period of construction of works
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Detailed explanation-1: -Capital expenditure is the money used to buy, improve, or extend the life of fixed assets in an organization, and with useful life for one year or more. For example, purchases of fixed assets, interest on borrowing during the period of construction of works, etc. Hence the correct option is B.
Detailed explanation-2: -Types of capital expenditures can include purchases of property, equipment, land, computers, furniture, and software.
Detailed explanation-3: -Capital Expenditure are those which are incurred to get the benefits in coming future. Like buying of assets or heavy expenditure on overhaul of assets to improve the operational activities. Hence interest on loan taken for the purchase of fixed assets is a capital expenditure.
Detailed explanation-4: -Capital expenditure (sometimes abbreviated as Capex, CAPEX or CapEx) is one-off expenditure that results in the acquisition, construction or enhancement of significant fixed assets including land, buildings and equipment that will be of use or benefit for more than one financial year.
Detailed explanation-5: -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.