Question

Amount spent to increasing the earning capacity is a
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Answer 1

Explanation:

capital expenditure

The amount spent to increase earning capacity is called as "capital expenditure"

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Answer 2

Answer:

An expenditure made to increase the earning capacity of an organisation is treated as capital expenditure.

Explanation:

The cost of acquiring capital asset is a major expense. Such expenses are known as Capital Expenditure If it finds trading in stocks, it means it is a revenue stream. A capital asset is one that is used internally or for business purposes and is not intended for sale during the normal course of a business venture. Purchasing stock for sale is not as costly as it is to sell during normal business hours. The cost of buying and installing equipment is huge. Also when costs are made for the purpose of creating an asset or profit for the benefit of a permanent trade it is a huge expense except in special circumstances that lead to the opposite conclusion.