Which of the following is an example of a capital expenditure? a.Cleaning the carpet in the front room b.Replacing burned-out light bulbs in the factory c.Tune-up for a company truck d.Replacing an engine in a company car

Capital expenditure refers to the amount expended the purchase or improvement of the fixed assets. It is the expenditure which would help in upgrading or extending the assets' life.Cleaning the carpet is a revenue expenditure and a routine activity. It is not a capital expenditure. Replacing bulbs is an expenditure of revenue nature as it is not an expense which would upgrade any fixed asset. Tuning up for a company truck is not a revenue expense as it will not improve the non-current asset. Replacing engine will upgrade the car and thus, it is a capital expenditure. Thus, option d. is correct.

Answered: Which of the following is an example of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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	a.	Cleaning the carpet in the front room
	b.	Replacing burned-out light bulbs in the factory
	c.	Tune-up for a company truck
	d.	Replacing an engine in a company car

Which of the following is an example of a capital expenditure? a. Cleaning the carpet in the front room b. Replacing burned-out light bulbs in the factory c. Tune-up for a company truck d. Replacing an engine in a company car