How to Define Capital Expenditure

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Capital expenditure is defined at the expense of purchasing the things that make a business run properly, such as a building or a piece of equipment. Discover how capital expenditures should last a certain period of time with information from a certified public accountant in this free video on business terms.

Part of the Video Series: Business & Accounting Terms
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Video Transcript

Let's define a capital expenditure. When we enter into a new business venture, there are things we have to buy to make the business run. Let's say, a place to do our business from. A piece of equipment with which we do the manufacture of the product we're going to sell. Each time we make an expenditure for an asset, such as a building or a piece of equipment, we expect it to last for a period of time. Lasting more than a year, hopefully many more. And, the expense of that money is called a capital expenditure.


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