Capital Items

These are items that are kept permanently for use in the business. These items are retained as assets of the business.

The assets’ account can remain open at the end of the period, and their balances would be transferred to the balance sheet as fixed assets. If an asset is purchased, its value increases, and it is reduced if it is sold. The expenditure that might be incurred when an asset is purchased is capitalized.

For example, if office furniture is purchased, the installation and transportation cost should be added to the cost of the furniture.

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