Types of expenditure- capital expenditure Flashcards
What is expenditure?
money spent by a business
Describe capital expenditure using examples
Non-current asset, intangible assets
What is a non-current asset?
Items owned by a business which will remain in the business for a reasonable period of time
Where are the business’s non-current assets shown?
the business’s statement of financial position (balance sheet)
Examples of non-current assets
land, premises, machinery, vehicles, fixtures, fittings and equipment
What are non-current assets also known as?
Tangible assets, because they can be touched. (A new van for the business can be touched)
What do most non-current (fixed) assets lose over time?
Value- they are depreciated, which means each year the asset loses its value.
What does intangible mean?
Something owned by the business that cannot be touched, but adds value to the business
Give the 4 examples of intangibles?
Good will, Patents, Trademarks, and Brand name
Explain goodwill
Reputation and name of the business being known (successfully), which increases value of the business, therefore also increases the selling price of the business, which reflects on its goodwill.
Explain Patents
A patent is the legal recognition of an invention, such as a new products, new features on products (upgraded), or new processes
Explain trademarks
A logo, symbol, words, or colours associated with the business which defines it, adding value and therefore is an intangible asset
Explain brand name
A feature of the business that is recognised by customers, and distinguishes a business from competitors. Customers can make expectations based on the brand name and previous encounters with the brand
