Question

Capital expenditures, also called balance sheet expenditures, are additional costs of plant assets that provide benefits extending beyond the current period.

Select one:

a. FALSE

b. TRUE

Answer 1

Answer; b.true

reason : capital expenditure (CAPEX) is the amount spent to acquire or upgrade the capacity or capabilities of long-term assets. in contrast to revenue expenditure ,capital expenditure or balance sheet expenditures are intended to benefit future periods .GAAP (Generally Accepted Accounting Principles) states that an expenditure can be capitalised if it is expected to give economic benefits in future over several accounting periods .example of CAPEX ; amount spent to acquire or improve assets such as plant,land and buildings.capital expenditure is added to the assets account rather than in the income statement,and thus increases the asset's basis.

a revenue expenditure is the amount spent on account of the day-to-day activities of the business operations and will be matched immediately with the revenues reported on the current period's income statement.example; amount spent on repairs and maintenance, selling, general and administrative expenses.