Overview of Capital Expenditure
Capital expenditure refers to the estimated expenditure of the government in a fiscal year that creates assets or causes a reduction in liabilities.
Government Budget and Capital Expenditure
The government budget is an annual statement showing government expenditures during a fiscal year. The main objectives are reallocation of resources and activities.
Understanding Capital Expenditure
What is capital expenditure? It refers to the money spent to acquire assets or improve existing ones, leading to long-term growth.
Capital Expenditure Practices
Capital expenditures are major investments of capital to expand a business. Revenue expenses, in contrast, are short-term operational costs.
Capital Expenditure Accounting
Capital expenditure is the expenditure for buying long-term fixed assets in an organization.
Expense Categories and Financial Impact
Both CAPEX and OPEX affect a company’s financial statements. CAPEX impacts the balance sheet as it represents an investment in long-term assets.
Significance of Capital Expenditure Decisions
Capital expenditure decisions are significant due to their high initial costs, irreversibility, and long-term repercussions. Planning and implementing the budget for capital expenditure need to be done carefully and effectively.
Impact of Government Capital Expenditures
The government also makes capital expenditures resulting in the creation of assets or reduction of liabilities.