CAPITAL EXPENSE Meaning and
Definition
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A capital expense refers to a significant amount of money or funds that are spent on purchasing, improving, or acquiring long-term assets for a business or organization. It includes expenses that are used to acquire or enhance assets that have a useful life longer than a year. These expenses are typically made to improve the efficiency, productivity, or capacity of a company, rather than for day-to-day operations.
Capital expenses are typically investments that are expected to provide long-term benefits to the business. Such expenses could include the acquisition or construction of buildings, purchase of machinery, vehicles, or equipment, software development costs, or any other major long-term investments that contribute to the growth and expansion of the business.
Unlike operational expenses, which are recurring and necessary for the ongoing functioning of a business, capital expenses are one-time or infrequent in nature. Capital expenditures are recorded as assets on a company's balance sheet and are usually depreciated or amortized over their estimated useful life, as their value decreases over time.
Capital expenses are crucial for businesses to remain competitive, improve operations, or expand into new markets. These expenses require careful planning and consideration as they represent a significant financial investment that can have long-lasting impacts on the organization's financial health and future profitability.
Common Misspellings for CAPITAL EXPENSE
- xapital expense
- vapital expense
- fapital expense
- dapital expense
- czpital expense
- cspital expense
- cwpital expense
- cqpital expense
- caoital expense
- calital expense
- ca-ital expense
- ca0ital expense
- caputal expense
- capjtal expense
- capktal expense
- capotal expense
- cap9tal expense
- cap8tal expense
- capiral expense
- capifal expense
Etymology of CAPITAL EXPENSE
The word "capital" in the term "capital expense" stems from the Latin word "capitālis", which means "of the head" or "chief". In financial contexts, "capital" refers to assets and resources used for production or investment purposes.
Meanwhile, "expense" comes from the Latin word "expensum", which means "outlay" or "spending". It refers to the cost or expenditure incurred to acquire or maintain something.
When combined, "capital expense" refers to a significant expenditure made to acquire an asset or improve the value and lifespan of an existing asset used in business operations. It typically involves expenditures that provide long-term benefits, such as the purchase of property, equipment, or infrastructure.
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