What type of expenses would typically be considered ‘capital expenses’?

Capital expenses are typically significant expenditures made to acquire or improve long-term assets that will benefit a business over an extended period. These expenses are not tied to the day-to-day operational activities of the business but rather focus on investments that enhance the company’s capabilities or longevity.

Investments in assets such as machinery, vehicles, buildings, or equipment fall under this category because they are intended to provide utility for more than one year. Capital expenses are capitalized on the balance sheet and depreciated over their useful life, reflecting their lasting benefit to the business.

In contrast, ongoing supplies and daily operational costs are categorized as operational or running expenses, which are necessary for the day-to-day functioning of the business but do not contribute to long-term asset value. Similarly, education and training costs for employees, while important for workforce development, do not directly create an asset that can be capitalized in the same way machinery can be. Thus, the focus of the question on long-term investments is critical in identifying capital expenses accurately.