Spending on fixed assets such as land and buildings is known as?

Spending on fixed assets such as land and buildings is known as?

• A. Revenue expenditure
• B. Capital expenditure
• C. Overdrafts
• D. Leasing

Answer: (B)

Capital expenditure is spending to acquire or improve fixed assets such as land and buildings. These assets provide benefits for more than one year, so their cost is recorded on the balance sheet and depreciated over time (land is typically not depreciated). This contrasts with revenue expenditure, which covers day-to-day operating costs that are charged to the income statement in the current period. An overdraft is a short-term source of finance, not asset purchases, and leasing is renting the use of an asset rather than buying it outright.

Capital expenditure is spending to acquire or improve fixed assets such as land and buildings. These assets provide benefits for more than one year, so their cost is recorded on the balance sheet and depreciated over time (land is typically not depreciated). This contrasts with revenue expenditure, which covers day-to-day operating costs that are charged to the income statement in the current period. An overdraft is a short-term source of finance, not asset purchases, and leasing is renting the use of an asset rather than buying it outright.