When Michael started his construction company, he needed to purchase some very expensive excavating equipment, but he didn't have the cash on hand to do so. He borrowed from the bank to cover this ________ expenditure.
A) short-term
B) capital
C) intangible
D) principal
E) inventory

Question

Quizplus · Accepted Answer

Capital expenditure refers to funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment. In this context, Michael is investing in expensive excavating equipment, which is a long-term investment in the company's operational infrastructure, fitting the definition of a capital expenditure.

When Michael Started His Construction Company, He Needed to Purchase