What is capital expenditure?

• A. Investment in marketing campaigns.
• B. Capital expenditure refers to spending on non-current assets used by ABC for more than one year, such as large-scale solar panels and e-waste recycling facilities.
• C. Operating expenses that are consumed within the year, such as utilities billed monthly.
• D. Costs of acquiring inventory for resale.

Answer: (B)

Capital expenditure is spending on non-current assets that will be used for more than one year. These investments create or maintain long-term capacity or efficiency, and are recorded on the balance sheet as assets that are depreciated over their useful lives. The example of large-scale solar panels and an e-waste recycling facility fits this, because both are long-term assets expected to benefit the company for many years. In contrast, operating expenses are costs used up within the year, like utilities or marketing campaigns, and are expensed in the current period. Costs of acquiring inventory are current assets tied up in stock, not capital expenditures.