With reference to the expenditure made by an organization or a company, which of the following statements is/are correct?1. Acquiring new technology is capital expenditures.2. Debt financing is considered capital expenditure, while equity financing is considered revenue expenditure.Select the correct answer using the code given below.
✓ Correct answer: a) 1 only
ExplanationStatement 1 is correct : When a company uses its funds to acquire or upgrade physical assets, it is called Capital Expenditure (CapEx).These assets can include property, plants, buildings, technology, or equipment.CapEx is intended to pro- vide long-term benefits to the organization.Statement 2 is incorrect : When a company borrows money to be paid back at a future date with interest it is known as debt financing.It is not a capital expenditure.Equity financing is the process of raising capital through the sale of shares.It is an ex- ample of non-debt capital receipts, not revenue expenditure.Capital Expenditure (CapEx): refers to the funds a company spends on acquiring, upgrading, or maintaining physical assets such as property, buildings, technology, machinery, or equipment.These expenditures are intended to provide long-term benefits to the company by improving its production capacity, efficiency, or overall infrastructure.Equity Financing : Equity financing is the process of raising capital through the sale of shares.It is an example of non-debt capital receipts.
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