Which of the following is an example of capital expenditures?

• A. Monthly office supplies
• B. Employee travel expenses
• C. Major equipment purchases
• D. Marketing collateral creation

Answer: (C)

Capital expenditures refer to funds used by an organization to acquire, upgrade, and maintain physical assets, which can include equipment, property, or buildings. These expenditures are typically significant investments that provide value over a longer period.

Major equipment purchases exemplify capital expenditures because such investments are typically high-cost and provide utility over several years, supporting the operations and growth of an organization. This aligns with the definition of capital expenditures, as they are not regular operational expenses but rather long-term investments aimed at enhancing the organization's capacity and efficiency.

In contrast, office supplies, employee travel expenses, and marketing collateral creation are generally classified as operating expenses. These costs are incurred as part of the day-to-day running of the organization and do not contribute to the long-term asset base in the same way that major equipment purchases do. Thus, they do not fit the criteria of capital expenditures.