Which of the following is an example of capital costs?

Which of the following is an example of capital costs?

• A. Vehicles
• B. Rent
• C. Salaries
• D. Printing costs

Answer: (A)

Capital costs are investments in long-lived assets that provide value over more than one year. Vehicles fit this category because they are used in operations for several years and are depreciated over their useful life. They’re capitalized on the balance sheet rather than expensed immediately. Rent, salaries, and printing costs, by contrast, are incurred in the current period and recorded as expenses as they’re incurred. So, the purchase of vehicles is the example of a capital cost.

Capital costs are investments in long-lived assets that provide value over more than one year. Vehicles fit this category because they are used in operations for several years and are depreciated over their useful life. They’re capitalized on the balance sheet rather than expensed immediately. Rent, salaries, and printing costs, by contrast, are incurred in the current period and recorded as expenses as they’re incurred. So, the purchase of vehicles is the example of a capital cost.