Capital expenditure is an expenditure which
Correct answer: C. Results in the acquisition of a permanent asset
- A. Benefits the current accounting period
- B. Will benefit the next accounting period
- C. Results in the acquisition of a permanent asset
- D. Results in the acquisition of a current asset
Explanation
Capital expenditure provides a benefit beyond the current period, commonly by acquiring or improving a long-term asset. Among the choices, acquisition of a permanent asset is the defining result.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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