The costs that provide a benefit to a company over more than one accounting period are called:

Question

Options

• ACapital expenses
• BRevenue expenses
• CAsset expenses
• DManufacturing equipments expenses

• A
  74% (25)
• B
  9% (3)
• C
  3% (1)
• D
  15% (5)

Explanation

Capital expenses (also called capital expenditures or CapEx) are costs that provide benefits across multiple accounting periods, which is why option A is correct - examples include purchasing machinery, buildings, or patents that are capitalized and depreciated over their useful lives.

Option B is wrong because revenue expenses (also called operating expenses) are costs consumed within a single accounting period, like rent or utilities - they're expensed immediately, not spread across periods. Option C is wrong because "asset expenses" is not a standard accounting term; while capital expenses do create assets on the balance sheet, the recognized category is "capital expenses." Option D is wrong because "manufacturing equipment expenses" is too narrow and specific - it describes just one example of a capital expense, not the broader category being defined.

Memory tip: Think "capital" = long-lasting, like a capital city that endures for centuries. If a cost builds something that lasts more than one period, it's capital; if it's gone by year-end, it's revenue.

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