The correct answer is A. Capital expenditure.
Capital expenditure is the cost of acquiring or improving fixed assets. Fixed assets are assets that are used in the production of goods or services and that have a useful life of more than one year. Examples of fixed assets include land, buildings, equipment, and machinery.
Depreciation is the process of allocating the cost of a fixed asset over its useful life. Depreciation is a non-cash expense, which means that it does not reduce cash flow. However, depreciation does reduce taxable income, which can result in tax savings.
Revenue expenditure is the cost of goods or services that are used up in the current period. Examples of revenue expenditure include the cost of goods sold, salaries, and utilities.
Deferred revenue expenditure is an expenditure that is incurred in one period but benefits future periods. Examples of deferred revenue expenditure include prepaid rent and prepaid insurance.
Real expenditure is an expenditure that results in a physical asset. Examples of real expenditure include the purchase of land, buildings, and equipment.
In conclusion, depreciation of fixed assets is an example of capital expenditure because it is the cost of acquiring a fixed asset.