Asked by Jessica Green on Jul 06, 2024
Verified
Expenditures that increase operating efficiency or capacity for the remaining useful life of a fixed asset are called capital expenditures.
Operating Efficiency
A measure of how effectively a company uses its resources to generate profits.
Capital Expenditures
Funds used by a company to acquire or upgrade physical assets such as equipment, property, or industrial buildings.
- Comprehend the theory and use of capital expenditures as opposed to expenses.
Verified Answer
KD
Kingsley DamasahJul 10, 2024
Final Answer :
True
Explanation :
Capital expenditures are investments made in fixed assets that are expected to increase the asset's useful life, improve its efficiency or capacity, or provide other economic benefits beyond the current period. These expenditures are capitalized and depreciated or amortized over the asset's useful life. Expenditures that only maintain or repair an asset's existing condition are typically considered operating expenditures.
Learning Objectives
- Comprehend the theory and use of capital expenditures as opposed to expenses.
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