Key Takeaways
Capital expenses include long-term investments like buying a building, investing in machinery, or filing patents. Operating expenses include daily expenses like the cost of rent, office supplies, and staff wages that are part of running ongoing operations.
What is the difference between capital cost and operating cost?
Capital expenditures are a company's major, long-term expenses while operating expenses are a company's day-to-day expenses. Examples of CapEx include physical assets, such as buildings, equipment, machinery, and vehicles. Examples of OpEx include employee salaries, rent, utilities, and property taxes.
What is considered a capital cost?
What is Capital Cost? Capital costs are one-time expenditures on the construction, enhancement, or acquisition of assets such as equipment and land that will benefit the project for more than one financial year. The money is necessary to move the project from a concept to commercialization.
What's the difference between capital and expense?
Capitalizing is recording a cost under the belief that benefits can be derived over the long term, whereas expensing a cost implies the benefits are short-lived.