Question:
Identify, which of the following is not a Capital Expenditure for a firm?
Identify, which of the following is not a Capital Expenditure for a firm?
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Capital expenditure buys assets that last for years. Which option is regular income instead?
Updated On: Nov 3, 2026
- Purchase of machinery
- Purchase of a Building
- Loan taken from Bank
- Rent Received
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The Correct Option is D
Solution and Explanation
Step 1: Understand the term:
Capital expenditure is money spent to buy a fixed asset or to make it better, and the benefit lasts for many years.
It is not a routine running cost and it is not income. We must find the item that does not fit this meaning.
Step 2: Check option (A):
Machinery is a fixed asset. It is used in the business for many years, so buying it is capital expenditure.
So (A) is a capital expenditure and is not the answer.
Step 3: Check option (B):
A building is also a fixed asset that serves the firm for a long time. Buying it is capital expenditure.
So (B) is a capital expenditure and is not the answer.
Step 4: Check option (C):
A bank loan is a long-term source of funds. It is a capital item (a capital receipt that adds to liabilities), not a day-to-day income of the firm.
The firm does not earn it by running the business. So it belongs with the capital items and is not the odd one out.
Step 5: Check option (D):
Rent received is the income the firm earns by letting out its property. It comes again and again every period.
It is a revenue receipt. It is not a spending on a fixed asset, so it can never be a capital expenditure. So (D) is the item that is not a capital expenditure.
Final Answer:
Rent Received is a revenue item, not a capital expenditure. This is option (D). \[ \boxed{\text{(D) Rent Received}} \]
Capital expenditure is money spent to buy a fixed asset or to make it better, and the benefit lasts for many years.
It is not a routine running cost and it is not income. We must find the item that does not fit this meaning.
Step 2: Check option (A):
Machinery is a fixed asset. It is used in the business for many years, so buying it is capital expenditure.
So (A) is a capital expenditure and is not the answer.
Step 3: Check option (B):
A building is also a fixed asset that serves the firm for a long time. Buying it is capital expenditure.
So (B) is a capital expenditure and is not the answer.
Step 4: Check option (C):
A bank loan is a long-term source of funds. It is a capital item (a capital receipt that adds to liabilities), not a day-to-day income of the firm.
The firm does not earn it by running the business. So it belongs with the capital items and is not the odd one out.
Step 5: Check option (D):
Rent received is the income the firm earns by letting out its property. It comes again and again every period.
It is a revenue receipt. It is not a spending on a fixed asset, so it can never be a capital expenditure. So (D) is the item that is not a capital expenditure.
Final Answer:
Rent Received is a revenue item, not a capital expenditure. This is option (D). \[ \boxed{\text{(D) Rent Received}} \]
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