Capital expenditure

Capital expenditure is that expenditure by a business that results in the acquisition of fixed assets or an improvement in their earning capacity. Capital expenditure is not charged as an expense in the profit and loss account? the expenditure appears as a fixed asset in the balance sheet. The consumption or use of the fixed asset over time is reflected in the profit and loss account by calculating the amount of depreciation that has occurred. (See depreciation)

 

reference: Business Studies / Accounting. Accounts & Finance Glossary. Jim Riley BA(Hons) MBA FCA // tutor2u

Tags: