Question

An expenditure is a capital expenditure when ______.

Options

• It relates to sale fixed assets.

• It arises due to abnormal reasons.

• It involves withdrawal of capital.

• It relates to maintain the efficiency of an asset.

Answer 1

An expenditure is a capital expenditure when it involves withdrawal of capital.

Explanation:

Capital expenditure is incurred either to purchase or build a non-current asset, or to improve or upgrade an existing non-current asset.