CAPITAL EXPENSES Meaning and
Definition
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Capital expenses refer to significant expenditures made by a business or organization to acquire, improve, or maintain a long-term asset that will benefit the company over an extended period of time, typically beyond one year. These expenses are characterized by their substantial and enduring nature, as they are not consumed or expended in the current accounting period. Instead, capital expenses are considered investments in the future growth, efficiency, or value of a business.
Examples of capital expenses include the purchase of land, buildings, equipment, machinery, vehicles, infrastructure, and intellectual property rights. These expenditures are intended to enhance the productive capacity, operational capabilities, or competitive advantage of a company.
Capital expenses are typically distinguished from revenue expenses, which pertain to the day-to-day operating costs of a business such as salaries, utilities, repairs, and marketing expenses. Unlike capital expenses, revenue expenses are fully deductible in the year they are incurred and are not carried over to future periods.
Accounting for capital expenses involves capitalizing the expenditure on the balance sheet as a long-term asset and depreciating its value over its useful life. This accounting treatment recognizes that the benefit of the capital expenditure is realized over multiple accounting periods, rather than being expensed all at once.
Common Misspellings for CAPITAL EXPENSES
- capital expence
- xapital expenses
- vapital expenses
- fapital expenses
- dapital expenses
- czpital expenses
- cspital expenses
- cwpital expenses
- cqpital expenses
- caoital expenses
- calital expenses
- ca-ital expenses
- ca0ital expenses
- caputal expenses
- capjtal expenses
- capktal expenses
- capotal expenses
- cap9tal expenses
- cap8tal expenses
- capiral expenses
Etymology of CAPITAL EXPENSES
The word "capital" comes from the Latin word "caput", meaning "head". In ancient Rome, "caput" was used to refer to a person's wealth or possessions. Over time, it developed the meaning of "principal or chief" and began to be used to indicate an important or primary aspect.
The word "expense" has its roots in the Latin word "expensa", which means "payment" or "expenditure". It comes from the Latin verb "expendere", meaning "to weigh out" or "to pay out".
When combined, "capital expenses" refers to expenditures related to acquiring, improving, or maintaining long-term assets or investments, generally categorized as capital assets. These expenses are considered significant or principal in nature because they often involve substantial financial investments and have a long-term impact on an entity's operations.
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