Asked by Kailyn Holmes on May 04, 2024
Verified
A capital expenditure is recorded in an equity account.
Capital Expenditure
Capital invested by an enterprise in procuring or upgrading solid assets such as land, manufacturing facilities, or hardware.
Equity Account
An account representing the owner's interest in the company, calculated as total assets minus total liabilities.
- Grasp the criteria for capitalizing expenditures and distinguishing between capital and revenue expenditures.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
False
Explanation :
A capital expenditure is recorded as an asset on the balance sheet, not in an equity account. Equity accounts represent the owner's interest in the company, while capital expenditures are investments in long-term assets.
Learning Objectives
- Grasp the criteria for capitalizing expenditures and distinguishing between capital and revenue expenditures.
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