Replacement of old tyres and tubes by new ones
Purchase of truck by a company
Cost of painting the old building
All the above
Answer is Right!
Answer is Wrong!
The correct answer is D. All the above.
Transactions of capital nature are those that are not part of the ordinary course of business and that have a long-term impact on the company’s financial position.
- Replacement of old tyres and tubes by new ones is a capital expenditure because it is a long-term investment that will improve the performance of the vehicle.
- Purchase of truck by a company is a capital expenditure because it is a long-term investment that will be used in the company’s operations.
- Cost of painting the old building is a capital expenditure because it is a long-term investment that will improve the value of the building.
All of these transactions are of capital nature because they are not part of the ordinary course of business and they have a long-term impact on the company’s financial position.