Which of the following items is a capital expenditure?
Answer Details
The capital expenditure is the purchase of office machinery.
Capital expenditures are investments in assets that a company expects to use for the long term, and that have a useful life beyond the current accounting period. They are typically significant investments that a business makes to expand or improve its operations, and are capitalized on the balance sheet rather than being expensed immediately.
In the given options, the maintenance of office machines and the purchase of office stationery are examples of revenue expenditures, which are the costs of running a business day-to-day and are expensed immediately. Carriage inwards is also a revenue expenditure that refers to the cost of transporting goods purchased from suppliers to the business's location.
On the other hand, the purchase of office machinery is a capital expenditure as it is a significant investment that is expected to provide a benefit for multiple accounting periods. It is not expensed immediately but is instead recorded as an asset on the balance sheet and depreciated over its useful life.
Therefore, of the given options, only the purchase of office machinery qualifies as a capital expenditure.