A. 43. Create your account. Greater risk is associated with improving existing products than creating new products. B) Once a capital investment is made, they are almost always impossible to reverse. In the meantime, and especially in the IT field, you run the risk of this item becoming outdated or outgrown before it has paid for itself. Sciences, Culinary Arts and Personal B. Sciences, Culinary Arts and Personal So, the correct answer is a. The following are the objectives of capital budgeting. Capital expenditures represent some of the largest expenses associated with an investment property. 4. Classification of Capital Expenditure. Option (D) It is commonly used to expand the level of operations. Risk increases as the time between the R&D activity and the cash flows from the project increases. Which of the following is capital expenditure? (Points : 4) The amount of time between the R&D activity and the cash flows from the project does not affect risk. The direct materials budget is prepared on the basis of the_______. Capital expenditures usually take two forms: maintenance expenditures and expansion expenditures.Due to their substantial initial costs, irreversibility, and long-term effects, capital expenditure decisions are very critical to an organization. It is commonly used to expand the level of operations 38) The basic motive for capital expenditure is to ________. Each question has 4 answers from which you need to choose the correct one. (c) Capital expenditures are expenses, and revenue expenditures are assets. It increases the investments of the company for generating more revenues or profits regarding the fixed assets of the company. In planning and controlling capital expenditures, the most logical sequence is to begin with a. Analyzing capital addition proposals. Suppose a firm's tax rate is 35%. d. Identifying capital addition projects and other capital needs. 1) Which of the following is a capital expenditure? b. For example, if you acquire a $25,000 asset and expect it to have a useful life of five years, then charge $5,000 to depreciation expense in each of the … 1st - University. It will decrease the capital of the business. (a) Capital expenditures and revenue expenditures are both assets. This is also sometimes known as PP&E, short for property, plant, and equipment. The capital expenditure may be classified into the following categories. A capital lease is a lease of business equipment that represents ownership and is reflected on the company's balance sheet as an asset. 27 times. Business. Our experts can answer your tough homework and study questions. © copyright 2003-2020 Study.com. A capital expenditure budget is a formal plan that states the amounts and timing of fixed asset purchases by an organization. a) Payment of an account payable b) Retirement of bonds payable c) Payment of federal income taxes d) none of these 2) which of the following is not a capital expenditure? Which of the following statements is false? Which one of the following is NOT true about the capital budgeting process? Accounting for a Capital Expenditure. It is commonly used for current asset expansion. Capital expenditures (CapEx) refers to the money a company spends towards fixed assets, such as the purchase, maintenance, and improvement of buildings, vehicles, equipment, or land. A capital expenditure is recorded as an asset, rather than charging it immediately to expense. The capital budget is a(n): A. It is classified as a fixed asset, which is then charged to expense over the useful life of the asset, using depreciation. Capital expenditure, as opposed to revenue expenditure, is generally of a one-off kind and its benefit is derived over several accounting periods. True or False. answer choices . Which one of the following is true about capital expenditures? The result of recording a capital expenditure as... On 12-31-15, Acme purchased a machine. Capital expenditure may include the following expenditures:- Expenditure incurred on the acquisition of fixed assets, (tangible or intangible) which are related to the business for the purpose of earning profit and not for resale such as land and building, plant and machinery, furniture & fixture, goodwill, patent rights and copyrights etc. © copyright 2003-2020 Study.com. All other trademarks and copyrights are the property of their respective owners. a. Assessing risk is a trivial part of research and development. In accounting, how electric phone and other... For a monopolist, marginal revenue is: a. 37) Which of the following is true of a capital expenditure? Capital Expenditure may include the following: Purchase costs (less any discount received) A Capital Expenditure Is An Outlay Of Funds Invested Only In Fixed Assets That Is Expected To Produce Benefits Over A Period Of Time Less Than One Year. C) It is commonly used for current asset expansion. Capital expenditure are those which enhance the life of the asset and the benefits by incurring these expenditure arises in the coming years ahead. Capital expenditures, or … It is considered a capital expenditure when the asset is newly purchased or when money is used towards extending the useful life of an existing asset, such as repairing the roof. Services, Capital Expenditures: Definition, Formula & Examples, Working Scholars® Bringing Tuition-Free College to the Community. Become a member and unlock all Study Answers There’s no … 1. A) It is a part of the financial budget. 3. To know whether the replacement of any existing fixed assets gives more return than earlier. An Outlay For Advertising And Management Consulting Is Considered To Be A Fixed Asset Expenditure. B) It is an outlay expected to produce benefits within one year. It must be completed before the cash budget is prepared. a.... Are the rising drug expenditures in the U.S.... Beech Corporation, an accrual basis taxpayer, was... Graffiti Advertising, Inc., reported the following... Quentin bought a new computer setup in 2016. asked Dec 22, 2018 in Business by kateranzweiler. Spending Rs.8.50 for purchase of spark plug is a normal cost of wear and tear, its not a capital nature expenses and to be recorded as … B. Capital expenditure or capital expense (capex or CAPEX) is the money an organization or corporate entity spends to buy, maintain, or improve its fixed assets, such as buildings, vehicles, equipment, or land. Which of the following is true of a capital expenditure? Which of the following statements is true of the capital expenditures budget? To decide whether a specified project is to be selected or not. A) It is part of a firm's investment plan. Which of the following statements is true of the capital expenditures budget? 52) Which of the following statements is true of the capital expenditures budget?
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