Question

Which of the following will be a Capital Expenditure for a business?
(a) Routine Advertisement Expenditure
(b) Advertisement for launching a new product
(c) Delivery Van purchased
(d) Salary to Employees

Answer 1

Answer:

B advertisement for launching a new product

Answer 2

Purchase of delivery van will be capital expenditure for a business. (Option c)

• Capital expenditure is an expenditure incurred on long-term, fixed assets. It either increases the assets or decreases the liabilities of the business.
• Routine advertisement expenses, advertisements for launching a new product, and salary to employees are revenue expenditures.
• Purchase of fixed assets, machinery, equipment, etc. are all capital expenditures.
• The benefits of such expenditures are enjoyed over a long duration of time.