Question

Which one of the following is capital expenditure?

• A. Cost of advertisement.
• B. Purchase of a delivery van.
• C. Purchase of raw material.
• D. Purchase of machine oil.

Answer 1

The correct option is B Purchase of a delivery van.

Capital expenditure is the money spends to buy, maintain, or improve its fixed assets, such as buildings, vehicles, equipment, land etc. In other words it is an amount spent to acquire or upgrade productive assets such as land, building, vehicles etc. in order to increase the capacity or efficiency of a company for more than one accounting period.

Therefore, in the given question purchase of delivery van is a capital expenditure.