Question : Which of the following is considered a capital expense?
Option 1: Pension
Option 2: Payment of salaries
Option 3: Subsidies
Option 4: Construction of school buildings
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Correct Answer: Construction of school buildings
Solution : The correct answer is the Construction of school buildings.
The money spent on purchasing, preserving, or enhancing fixed assets such as buildings, cars, machinery, land, etc is referred to as capital expenditure. Stated differently, it refers to the sum of money used to purchase or improve productive assets like real estate, buildings, cars, etc. to boost a company's capacity or efficiency over multiple accounting periods.
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