Capital Expenditure

Question 1

Non-current assets

Answer 1

• land
• buildings and premises
• vehicles
• machinery and equipment

Question 2

Intagible assets

Answer 2

• Goodwill
• Patents
• trademarks
• brand names

Question 3

What is an intangible assets ?

Answer 3

These are not physical items and may be difficult to value and sell

Question 4

Depreciation

Answer 4

• Some assets such as machinery and office furniture lose their value over time
• Depreciation is used to show the fall in value in the business’s accounts
• straight-line depreciation m reduces the value of the asset by the same amount each year
• reducing-balance depreciation shoes loss of vale as being higher during the early years

Question 5

Capital income

Answer 5

• Money used to set up a business

* its a long term investment (e.g. loan,mortgage)

Question 6

Revenue income

Answer 6

This is income received by the business on sales of its goods or services

Question 7

Examples of capital income

Answer 7

Loan-money lent to a business by an investor such as bank

Mortgage

Shares- issued by the company to shareholders who owns the business, as an investors in the business shareholder may receive dividend

Question 8

Examples of revenue income

Answer 8

Cash sales - through over the counter transactions

Credit sales - through sales using a method of credit

Rent received - when a business rents out a property it owns