WAEC SSCE - Financial Accounting - 2005 (Objective)

Question 1 Report

Capital expenditure is the

cost of running a business

money spent on buying goods for resale

money spent on acquire fixed assets

extra capital paid in by the proprietor

Answer Details

Capital expenditure refers to the money spent by a business on acquiring fixed assets such as buildings, machinery, equipment, and vehicles that are expected to provide long-term benefits to the company. These assets are not intended for resale, but rather for use in the production of goods or services. In contrast, the cost of running a business refers to the day-to-day expenses incurred by the company in the ordinary course of operations, such as rent, utilities, wages, and supplies. Similarly, money spent on buying goods for resale refers to the cost of inventory or stock-in-trade that is intended for resale. Extra capital paid in by the proprietor refers to additional funds contributed by the owner of the business, which may or may not be used for capital expenditures.

Read lesson note on Nature And Significance Of Accounting (JAMB)






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