Question

Which of the following statements regarding capital expenditures is incorrect?

A) Capital expenditures are purchases of long-term assets.
B) The decision to purchase long-term assets is part of a strategic plan.
C) Capital expenditures include delivery trucks, computer systems, and manufacturing equipment.
D) Installment payments related to the purchase of long-term assets are included in the capital expenditures budget.

Answer 1

The incorrect statement about capital expenditures is that installment payments related to the purchase of long-term assets are included in the capital expenditures budget. Capital expenditures refer to the initial purchase costs of long-term assets rather than ongoing payments.

Step-by-step explanation:

The incorrect statement regarding capital expenditures is D) Installment payments related to the purchase of long-term assets are included in the capital expenditures budget. Capital expenditures typically refer to the initial cost of purchasing long-term assets, not the ongoing installment payments. They include expenses such as delivery trucks, computer systems, and manufacturing equipment, which are vital for strategic business operations. Payment plans would be accounted for as liabilities and not as part of the capital expenditures.

Answer: D) Installment payments related to the purchase of long-term assets are included in the capital expenditures budget.