We distinguish sundry creditors for goods and services from those for capital goods. Sundry Creditos for Others (like for expenses, loans, capital goods) Eg: Expenses yet to be paid like outstanding salaries, wages, rent etc. For loans like, bank loan, bank overdraft. For Capital Goods like fixed assets.
What is meant by capital expenditure?
Capital expenditures (CapEx) are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. CapEx is often used to undertake new projects or investments by a company.
Are debtors a capital asset?
An important asset in businesses which sell goods or services on credit is money owed to the enterprise by customers. This asset is known as debtors. Capital is the value of the investment in the business by the owner(s).
What is meant by equity capital?
: capital (such as stock or surplus earnings) that is free of debt especially : capital received for an interest in the ownership of a business.
What all comes under capital expenditure?
Capital expenditures are long-term investments, meaning the assets purchased have a useful life of one year or more. Types of capital expenditures can include purchases of property, equipment, land, computers, furniture, and software.
What are the types of capital assets?
Capital assets can be of two kinds- LTCA (Long-Term Capital Asset) and STCA (Short-Term Capital Asset). LTCA are assets that are held for a period longer than the prescribed holding period.
What is the disadvantage of equity capital?
Disadvantage: Higher Cost Although equity does not require interest payments, it typically has a greater overall cost than debt capital. Stockholders shoulder more risk from their perspective compared to creditors because they are last in line to get paid if the company goes bankrupt.
Is security deposit a capital expenditure?
CIT(A) has not considered that assessee-company is not doing any business of real estate or rental. Therefore, security advance given to the lessor is capital expenditure.
