Question

Which of the following type of expenses are included in capital expenditure?

Options

• Depreciation on fixed assets

• Expenses incurred for day-to-day running of business

• Sale of fixed assets

• Raw material and stores

Answer 1

Raw material and stores

Explanation:

Normally, raw materials are revenue expenditure, but if they are used to manufacture or form part of a fixed asset, their costs are capitalised and treated as capital expenditure, not periodic expense.