Which of the Following Represents a Capital Expenditure

question 116

Multiple Choice

Which of the following represents a capital expenditure?

• A)Issuing paycheques to workers.
• B)Purchasing a building to be used for office space.
• C)Paying for advertising on a local radio station.
• D)Purchasing raw materials to be used in the production of a firm's product.

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Definitions:

Financial Lease

A type of lease where the lessee pays for an asset over a period of time, and at the end of the lease term the asset typically becomes the lessee's property.

Lessor

The entity in a lease agreement that possesses the asset and allows the lessee to utilize the asset in return for payments of rent.

Break-Even Lease Payment

The break-even lease payment is the lease payment at which the cost of leasing equals the cost of owning, neither gaining nor losing financially over the term of the lease.

CCA Class

In tax terminology, specifically for Canadian taxation, a system categorizing business assets for the purpose of depreciation calculation.