Which of the following represents a capital expenditure?
A)Issuing paycheques to workers.
B)Purchasing a building to be used for office space.
C)Paying for advertising on a local radio station.
D)Purchasing raw materials to be used in the production of a firm's product.

Question

Quizplus · Accepted Answer

Capital expenditures are investments in long-term assets that are used in the production of goods or services. Purchasing a building to be used for office space is a long-term asset that will benefit the company for an extended period, making it a capital expenditure. The other options are operating expenses as they are expenses incurred in the day-to-day operations of the company. Issuing paychecks to workers is a compensation expense, paying for advertising on a local radio station is a marketing expense, and purchasing raw materials is a direct cost of goods sold.

Which of the Following Represents a Capital Expenditure