Capital Expenditure - SS3 Accounting Past Questions and Answers - page 1
1
What are capital expenditures in accounting?
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A
Expenses incurred to acquire or improve long-term assets
B
Expenses that vary with the level of production or sales
C
Expenses that remain the same regardless of the level of production or sales
D
Expenses that are not related to the normal course of business
2
What is the purpose of depreciating long-term assets?
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A
To allocate the cost of the asset over its useful life
B
To record the expense immediately
C
To increase the value of the asset
D
To decrease the value of the asset
3
Which of the following is an example of capital expenditure?
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A
Purchase of office supplies
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B
Payment of salaries
C
Purchase of a new manufacturing facility
D
Advertising expenses
4
Why are capital expenditures important for a company's growth?
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A
They improve productivity and efficiency
B
They increase revenue
C
They reduce expenses
D
They are not important for growth
5
What is the difference between revenue and capital expenditures?
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A
Revenue expenditures are expensed immediately, while capital expenditures are depreciated over their useful life
B
Revenue expenditures are related to long-term assets, while capital expenditures are related to short-term assets
C
Revenue expenditures are optional, while capital expenditures are mandatory
D
Revenue expenditures are not recorded in the accounting system, while capital expenditures are recorded in the accounting system
6
How do companies decide whether to make a capital expenditure?
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7
What is the impact of capital expenditures on a company's financial statements?
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