Which of these spending items is a capital expenditure?
APaying a monthly cleaning contract
BPaying routine office stationery bills
CPaying a month's electricity bill
DBuying new equipment for a plant
Answer & Solution
Correct answer: D. Buying new equipment for a plant
Buying new equipment acquires a fixed asset with multi year use, while the others are routine running costs.
Keep practising Capital Budgeting
Browse all Capital Budgeting questions for CA Inter, or explore more Financial Management topics.
Related questions
Under which cash flow statement section is capex commonly reported?Which spending is capital expenditure as it extends asset life?Where do capitalised expenditures show up in the financial statements?Which expense is the counterpart of capital expenditure?What is capital expenditure (capex)?Payback also ignores which part of a project's cash flows?Which key weakness does the simple payback period have?Rs 90,000 is invested and yields Rs 30,000 net cash each year. When is it paid back?