Question

capital.expenditure is

Answer 1

Answer-

Capital Expenditures are the funds that a company uses to purchase, maintain or improve the long term assets. Long term assets are those which are used for more than one accounting period such as equipment, land , machinery, building and vehicles etc. Capital expenditure can be tangible or intangible.

Capital expenditures are also known as CapEx and capital expense. Capital expense includes repairing of a machine, purchasing of a factory etc. Capital expenses are related to the fixed assets so they don’t affect Income Statement of the company. It affects the balance sheet and cash flow statement. Capitalizing means to spread the cost over the useful life of the asset. Depreciation expense which is related to the asset, is shown in the Income statement as it is incurred during an accounting period. On the other hand accumulated depreciation is shown in the balance sheet. Capital expenditure is of great importance because it affects future values. Capital  expenditures can hardly be undone without the company incurring losses. Wrong  capital investment decisions are often irreversible, and poor ones lead to substantial losses being incurred so mangers should take the decisions carefully.However, with effective planning, using the right tools, and good project management , the company can take good decisions.

Note- In your question, capital expenditure is written only so for that I’m providing you this answer.