QuestionJuly 21, 2025

Which of the following items would most likely be included in a company's capital expenditure budget? A The purchase of food and beverages for an office party. B The purchase of a business. C The purchase of raw materials. D The purchase of copier machine paper.

Which of the following items would most likely be included in a company's capital expenditure budget? A The purchase of food and beverages for an office party. B The purchase of a business. C The purchase of raw materials. D The purchase of copier machine paper.
Which of the following items would most likely be included in a company's capital expenditure budget?
A
The purchase of food and beverages for an office party.
B
The purchase of a business.
C
The purchase of raw materials.
D
The purchase of copier machine paper.

Solution
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Answer

B The purchase of a business. Explanation 1. Identify Capital Expenditure Capital expenditures are funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment. 2. Analyze Options A. Office party expenses are operational, not capital. B. Purchasing a business involves acquiring long-term assets. C. Raw materials are operational costs for production. D. Copier paper is a recurring operational expense.

Explanation

1. Identify Capital Expenditure<br /> Capital expenditures are funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.<br /><br />2. Analyze Options<br /> A. Office party expenses are operational, not capital.<br /> B. Purchasing a business involves acquiring long-term assets.<br /> C. Raw materials are operational costs for production.<br /> D. Copier paper is a recurring operational expense.
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