Question
Explain the following terms with examples:
- Capital Expenditure
- Non-Current Assets
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Answer
- Capital Expenditure: Any expenditure which is incurred in acquiring or increasing the value of a fixed asset is termed as capital expenditure. As such, the amount spent on the purchase or erection of Building, Plant, Furniture etc. is capital expenditure. Such expenditure yields benefit over a long period and hence written in Assets.
- Non-Current Assets: Non-Current Assets refer to those assets which are held for continued use in the business for the purpose of producing goods or services and are not meant for sale. Examples of non-current assets are long-term investments and fixed assets such as Land and Building, Plant and Machinery, Computer, Motor Vehicles, Furniture etc.
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