Capital expenses are shown in___________?
Correct answer: A. Balance Sheet
- A. Balance Sheet
- B. Profit and Loss A/c
- C. Trading A/c
- D. None of these
Explanation
Capital expenditure provides a benefit beyond the current period, so it is recorded as an asset in the balance sheet and allocated later through depreciation where applicable. It is not charged immediately to the Profit and Loss Account or Trading Account.
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About Financial Statements
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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